Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

MOTIONS FOR UNOPPOSED RETURNS

Mr. Speaker: I call the First Deputy Chairman of Ways and Means to move the eight motions for unopposed returns in his name.

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2
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Date when Closure claimed, and by whom
Question before House or Committee when claimed
Whether in House or Committee
Whether assent given to Motion or withheld by the Chair
Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion
Result of Motion and, if a Division, Numbers for and against

and (2) in the Standing Committees under the following heads:—

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Date when Closure claimed, and by whom
Question before Committee when claimed
Whether assent given to Motion or withheld by the Chair
Assent withheld because, in the opinion of the Chair, a decision would shortly be arrived at without that Motion
Result of Motion and, if a Division, Numbers for and against

DELEGATED LEGISLATION

Return ordered,
of Instruments considered in Session 1985–86 by the Joint Committee and the Select Committee on Statutory Instruments respectively pursuant to their orders of reference, showing in each case the numbers of Instruments subject to the different forms of parliamentary procedure and of those within the Committees' orders of reference for which no parliamentary procedure is prescribed by statute, and the numbers drawn to the special attention of the House or of both Houses distinguishing the ground in the Committees' orders of reference upon which such attention was invited; and of the numbers of Instruments considered by a Standing Committee on Statutory Instruments, &amp;c. and by the House respectively, in Session 1985–86, showing the number where the question on the proceedings relating thereto was put forthwith under Standing Order No. 79(5)—[The First Deputy Chairman of Ways and Means.]

PRIVATE BILLS AND PRIVATE BUSINESS

Return ordered,
of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders introduced into this House and brought from the House of Lords, and of Acts passed in Session 1985–86;
Of all Private Bills, Hybrid Bills and Bills for confirming Provisional Orders which in Session 1985–86 were reported on by Committees on Opposed Bills or by Committees

CLOSURE OF DEBATE UNDER STANDING ORDER No. 31

Return ordered,
respecting applications of Standing Order No. 31 (Closure of debate) during Session 1985–86; (1) in the House and in Committee of the whole House, under the following heads:—

[The First Deputy Chairman of Ways and Means]

nominated partly by the House and partly by the Committee of Selection, together with the names of the selected Members who served on each Committee; the first and also the last day of the sitting of each Committee; the number of days on which each Committee sat; the number of days on which each selected Member served; the number of days occupied by each Bill in Committee; the Bills of which the Preambles were reported to have been proved; the Bills of which the Preamble were reported to have been not proved; and, in the case of Bills for confirming Provisional Orders, whether the Provisional Order ought or ought not to be confirmed;
Of all Private Bills and Bills for confirming Provisional Orders which in Session 1985–86 were referred by the Committee of Selection to the Committee on Unopposed. Bills, together with the names of the Members who served on the Committee; the number of days on which the Committee sat; and the number of days on which each Member attended;
And of the number of Private Bills, Hybrid Bills and Bills for confirming Provisional Orders withdrawn or not proceeded with by the parties, those Bills being specified which were referred to Committees and dropped during the sittings of the Committee—[The First Deputy Chairman of Ways and Means.]

PUBLIC BILLS

Return ordered,
of the number of Public Bills distinguishing Government from other Bills, introduced into this House, or brought from the House of Lords, during Session 1985–86 showing:



(1) the number which received the Royal Assent, and
(2) the number which did not receive the Royal Assent, indicating those which were introduced into but not passed by this House, those passed by this House but not by the House of Lords, those passed by the House of Lords but not by this House, those passed by both Houses but Amendments not agreed to; and distinguishing the stages at which such Bills were dropped, postponed or rejected in either House of Parliament, or the stages which such Bills had reached by the time of Prorogation.—[The First Deputy Chairman of Ways and Means.]

SELECT COMMITTEES

Return ordered,
for Session 1985–86, of statistics relating to the membership, work, costs and staff of Select Committees with so much of the same information as is relevant to the Chairmen's Panel and the Court of Referees.—[The First Deputy Chairman of Ways and Means.]

SITTINGS OF THE HOUSE

Return ordered,
of the days on which the House sat in Session 1985–86 stating for each day the day of the month and day of the week, the hour of the meeting, and the hour of the adjournment; and the total number of hours occupied in the sittings of the House, and the average time; and showing the number of hours on which the House sat each day, and the number of hours after the time appointed for the interruption of business.—[The First Deputy Chairman of Ways and Means.]

STANDING COMMITTEES

Return ordered,
of (1) the total number and the names of all Members (including and distinguishing Chairmen) who have been appointed to serve on one or more of the Standing Committees showing, with regard to each of such Members, the number of sittings to which he was summoned and at which he was present; (2) the number of Bills, Estimates, Matters and other items referred to Standing Committees pursuant to Standing Order No. 79 (Standing Committees on Statutory Instruments, &amp;c.) or Standing Order No. 80 (Standing Committees on European Community documents) considered by all and by each of the Standing Committees, the number of sittings of each Committee and the titles of all Bills, Estimates, Matters and other items as above considered by a Committee, distinguishing where a Bill was a Government Bill or was brought from the House of Lords, and showing in the case of each Bill, Estimate, Matter and other item, the particular Committee by whom it was considered, the number of sittings at which it was considered and the number of Members present at each of those sittings.—[The First Deputy Chairman of Ways and Means.]

SPECIAL PROCEDURE ORDERS

Return ordered,
of Special Procedure Orders presented in Session 1985–86; the number withdrawn; the number annulled; the number against which Petitions or copies of Petitions were deposited; the number of Petitions of General Objection and for Amendment respectively considered by the Chairmen; the number of such Petitions certified by the Chairmen as proper to be received, and the number certified by them as being Petitions of General Objection and for Amendment respectively; the number referred to a Joint Committee of both Houses; the number reported with Amendments by a Joint Committee, and the number in relation to which a Joint Committee reported that the Order be not approved and be amended respectively; and the number of Bills introduced for the confirmation of Special Procedure Orders:
Of Special Procedure Orders which, in Session 1985–86, were referred to a Joint Committee, together with the names of the Commons Members who served on each Committee;

the number of days on which each Committee sat; and the number of days on which each such Member attended.—[The First Deputy Chairman of Ways and Means.]

Oral Answers to Questions — TRADE AND INDUSTRY

Competition Policy (Monopolies and Mergers Commission)

Mr. Pavitt: asked the Secretary of State for Trade and Industry when he last met the chairman of the Monopolies and Mergers Commission to discuss competition policy.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): My last meeting with the chairman of the Monopolies and Mergers Commission took place on 15 April 1986.

Mr. Pavitt: When the Secretary of State next meets the chairman of the Monopolies and Mergers Commission, will he discuss in depth the human tragedies which are occurring as a result of rationalisation of takeover bids which lead to unemployment and family tragedy? In particular, will he look at the present takeover bid for Ault and Wyborg in the London borough of Brent, which is a good borough, and the loss of jobs that will occur if the takeover bid continues? Is it not time to stop raising the golden calf and the idol of glory for profit and look at people instead?

Mr. Channon: I shall refrain today from commenting about the London borough of Brent. The Office of Fair Trading is making preliminary inquiries into the possible takeover referred to by the hon. Gentleman. If it qualifies on assets or market share under the Fair Trading Act 1973, the Director General of Fair Trading will advise me in the normal way on the question of a reference to the Monopolies and Mergers Commission.

Mr. Grylls: Is my right hon. Friend aware that many people will be greatly encouraged by the setting up of the Leisener committee to look into competition policy? Does he agree that the Government's determination to see the growth of small and medium sized businesses, which has already had considerable success throughout the country, means that competition policy should be shaped to protect smaller firms from restrictive practices and excessive merger mania?

Mr. Channon: My hon. Friend has already given evidence to the committee and I shall certainly consider with great care the submissions that he and his colleagues have made about these issues, which I believe have much support in the House.

Mr. Ashdown: Within the context of competition policy, will the Minister explain how competition in the British economy is increased or improved by converting British Gas and British Telecom from public monopolies into private ones?

Mr. Channon: The whole House is well aware of the great success of the British Telecom flotation, and I am sure that the same will happen with British Gas.

Mr. Cash: Can my right hon. Friend confirm that detailed negotiations are taking place within the European Community on competition policy and that it would be highly desirable if more persons were qualified in matters relating to competition law? Does he agree that the Law Society and the Bar Council should take these matters seriously, because, on the whole, people are at present singularly ill qualified to advise on matters of that kind.

Mr. Channon: That is an important and interesting point. I agree with a great deal of what my hon. Friend has said. There is considerable interest in the commission about the whole area of competition policy and that, of course, will be considered in the review.

Mr. Campbell-Savours: Does the Secretary of State accept that my hon. Friend the Member for Brent, South (Mr. Pavitt) has raised an important matter? There are great injustices in this area. Will he, at the Dispatch Box today, condemn predatory acquisition by companies of other companies only for the purpose of closure? Is he aware that in the case of the Scottish and Newcastle attempt to take over Matthew Brown last year the only intention was to close the brewery in Workington? That is happening in other areas of the economy and it is for Secretaries of State to condemn that practice from the Dispatch Box. Scottish and Newcastle may well come back with a further bid in the next two months.

Mr. Channon: It would be quite wrong of me to make any comment on cases that might come before me when I have to decide whether to refer the matter to the Monopolies and Mergers Commission. It is essential in such cases that I preserve my right to act on my own discretion in deciding whether to refer matters to the MMC.

Mr. Dorrell: Does my right hon. Friend agree that, increasingly, competition policy should be operated on a Europe-wide rather than a purely national basis? Is it not crazy for us to be talking on the one hand about completing the internal market while on the other hand we are continuing and often even reinforcing the fragmentation of the European market?

Mr. Channon: The European aspects are always taken into account in deciding whether to refer a proposed takeover to the MMC. I have some doubts about the proposition advanced by my hon. Friend that it would be preferable for those matters to be decided by bodies other than the British Government.

Power Plant Industry

Mr. Nicholas Brown: asked the Secretary of State for Trade and Industry what support he is giving to the British power plant industry; and if he will make a statement on the industry's domestic work load.

The Minister of State, Department of Trade and Industry (Mr. Giles Shaw): My Department is providing substantial support in a number of ways: through financial assistance under the Industry Acts, through our support for innovation scheme, and through assistance on exports. The domestic work load is largely dependent on the ordering programme of the electricity boards, which is a matter for the boards themselves.

Mr. Brown: As the Minister says, I accept that the domestic ordering programme is a matter for his right hon.

and hon. Friends in the Department of Energy. Nevertheless, the Department of Trade and Industry is the British power plant industry's sponsoring Department. Can the hon. Gentleman tell the House why the Government have failed to provide a sufficient domestic ordering programme to provide a base load for the domestc industry so that we can compete on equal terms with foreign companies, in foreign markets, and so that the British industry can survive?

Mr. Shaw: I respect the hon. Gentleman's connection with the power plant industry because it is a major producer in his constituency, but he will know that the domestic ordering of the power industry is not within the control of the Department of Trade and Industry. He will know equally that it might help to see the Opposition applying a power policy indicating that nuclear power is to play an increasing role in power ordering. With regard to the Government's investment in assistance to the power plant industry, the hon. Gentleman should know that some £55 million has been invested under the Industry Acts since 1980, and some £164 million on aid and trade proposals, which have led to export orders worth £770 million, which is a very substantial amount.

Mr. Ron Brown: Recognising that many companies, including NEI Peebles in my constituency, have been artificially starved of orders, largely because of the attitude of the Central Electricity Generating Board and the South of Scotland Electricity Board, will the Minister use his muscle and influence to encourage the bureaucrats to place orders of that type, whether it is coal fired or turbo? That is important. Does the hon. Gentleman agree that scrap and build is an important argument put forward by the trade union movement, because many power stations have antiquated equipment and it is about time that it was replaced?

Mr. Shaw: I cannot follow the hon. Gentleman's advice and put forward a scrap and build programme. He will know that the CEGB is considering the case for new coal-fired stations, but equally he will know that no decision will be made on that until the Sizewell issue has been determined.

Mr. Kenneth Carlisle: Does my hon. Friend agree that thousands of jobs are tied up in the nuclear power industry and that there has not been an order for a nuclear power plant for more than eight years? That uncertainty has to be resolved shortly if those thousands of jobs are to be protected for the future.

Mr. Shaw: I agree entirely with my hon. Friend's point. He will be aware that the results of the Sizewell inquiry are awaited shortly by my right hon. Friend the Secretary of State for Energy.

Mr. Williams: The Minister rightly referred to the export performance of the industry. I am sure he will agree that the industry cannot survive on domestic sales alone. He also referred to the support that the Government have given the industry. What does he have to say about the complaint of the industry that in the export markets the financial package is now the crucial factor in determining whether we win or lose an order, and that in that respect the Government are crippling the industry by their abnormally high interest policy?

Mr. Shaw: The right hon. Gentleman is not being wholly fair about that. I took the opportunity to meet the


chairman and deputy chairman of NEI recently because I was aware of their restructuring operation. Their presentation showed that the support being offered to help win export orders is quite considerable. I accept that any industrial operator, particularly a heavy plant operator, would want there to be a reduction rather than an increase in interest rates.

Balance of Trade

Mr. Wallace: asked the Secretary of State for Trade and Industry if he will state the current balance of trade.

The Minister for Trade (Mr. Alan Clark): In the year ending September there was a surplus of £403 million on the current account.

Mr. Wallace: I am grateful to the Minister for that reply, but does he agree that in the third quarter of this year there was a deficit of £1·2 billion? When he looks to making up that deficit, what proportion of it does he envisage will come from increasing exports of manufactured goods and what proportion from increased exports of services? There is great fear on this side of the House that the Government are being complacent while the country's manufacturing base is being eroded.

Mr. Clark: The hon. Gentleman's figures are somewhat misleading, because we are broadly in balance for the whole of this year, although I recognise that one month in the third quarter was especially depressing. Our manufacturing productivity has increased by 32 per cent. since 1980, and in the last quarter our export of manufactures was at its highest level. I believe that that trend is on the increase.

Mr. Andrew MacKay: Does my hon. Friend agree that our trade balances will not be improved by excessive pay increases which are not linked at all to productivity and thus raise unit labour costs, making us much less competitive in world markets?

Mr. Clark: Unit labour costs are certainly a constituent in the competitiveness of British goods and services, and it is on competitiveness that success will depend. I know that Opposition Members have an insatiable appetite for bad news, but the news remains extremely good on the balance of payments front.

Mr. James Lamond: In the midst of all this so-called good news, can the Minister explain why, if we have a surplus on our balance of trade, the pound seems to be slipping all the time against almost every other currency in Europe?

Mr. Clark: The sterling-dollar rate has remained effectively the same for the past six months. The alteration in the rate against our competitors' currencies in Europe will doubtless be widely welcomed by British industry, which will no doubt endorse the hon. Gentleman's statement.

Sir Paul Bryan: Would my hon. Friend care to speculate on the long-term effect on the balance of trade if the Labour party's proposal for the control of foreign investment were put into force?

Mr. Clark: The somewhat homespun remedies peddled by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and his friends would unquestionably

have a very serious impact on confidence in the City and on the total of our trade in invisibles, which amounted to nearly £8 billion this year.

Mr. Skinner: Is not the truth of the matter that during the past seven years the manufacturing deficit incurred as a result of the Government's policies has reached more than £4 billion, whereas there was a surplus of a similar amount on 1979? Does the Minister agree that that resulted in the Government having to go to the international monetary markets to borrow $4 billion on 3 September—the highest amount ever borrowed by a British Government since the end of the second world war? Did that not result in the Chancellor of the Exchequer having to prop up the pound at the Tory party conference, using £1 billion that ought to have been used to prop up British industry and get Britain back to work?

Mr. Clark: The hon. Member's trip down memory lane, which was an almost daily occurrence under the Labour Government, betrays his ignorance, which is honourably based on a contempt for these international organisations. The decline in manufacturing trade is based on consumer preference for foreign goods. Until British manufactures are wholly competitive, that preference will continue to be expressed.

Mr. Watts: Does my hon. Friend agree that both the level of imports and the buoyancy of retail trade indicate that there is no lack of demand in the economy, contrary to the view expressed by all the Opposition parties, and that there are considerable market opportunities waiting for British companies to exploit them?

Mr. Clark: My hon. Friend is absolutely right. Consumer spending is going up very fast, and that very increase is sucking in imports and giving rise to the imbalance to which attention has been drawn. Until British goods are competitive in all sectors and all aspects, a rise in consumer spending is likely to have this effect.

Mr. Speaker: I call Mr. Robin Cook.

Hon. Members: Hear, hear.

Mr. Robin Cook: I am grateful to my hon. Friends. As I am a newcomer to these exchanges, can the Minister guide me as to any other country in the world which has managed to combine an oil surplus with a deficit on its visible trade? Did his office provide the Budget forecast of a £3 billion surplus on current account by the end of this year? Can he name another Budget forecast, even of this Government, which has gone quite so wildly wrong as that?

Mr. Clark: First, I must express my commiserations to the hon. Gentleman for the personal electoral reverse that he suffered. I recognise that that may cast a pall of gloom on some of the judgments that he offers at present. The forecast that he cited is the responsibility of my right hon. Friend the Chancellor of the Exchequer.

Mr. Wrigglesworth: Does the Minister accept that his complacency in relation to the balance of payments is quite staggering? Does he accept that the forecast, not least of his own Treasury, for the balance of payments deficit in the forthcoming year is somewhere between £2 billion and £3 billion? Does he accept that that is because of the uncompetitiveness of British industry, which has been damaged by Government policy over the past seven years,


and what do the Government intend to do about unit labour costs, oil prices and the exchange rate in order to reverse that?

Mr. Clark: In fact the bad figures arose at a time when in the last two quarters the oil price had been averaging between $12 and $13 per barrel. If OPEC raises the oil price to $18 per barrel, the overall effect on our oil exports will be an increase of nearly 50 per cent. in value. Therefore, that particular ingredient is likely to be corrected in the next year if the OPEC objectives are achieved.
Lack of competitiveness is certainly a serious drawback, as I have said on a number of occasions already, but productivity in manufacturing industry is more than 32 per cent. up since the advent of this Government.

Mr. Speaker: Question No. 4. I call Mr. Robert Atkins —[Interruption.] Order. We are making very slow progress and have only reached question No. 4.

Mr. Nellist: That is because a lot of hon. Members asked questions on the last subject. They were waiting for the hon. Member for South Ribble (Mr. Atkins), who has only just come into the Chamber.

Mr. Speaker: Order. Patience is a great virtue in this place.

Copyright Reform

Mr. Robert Atkins: asked the Secretary of State for Trade and Industry what representations he has received from the automotive industry about his proposals for the reform of the copyright laws.

The Minister for Information Technology (Mr. Geoffrey Pattie): I have received a large number of representations from the automotive industry about the unregistered design right proposed in the intellectual property White Paper.

Mr. Atkins: Is my hon. Friend aware that there is some concern and not inconsiderable anger in the automotive support industry, represented by large and small companies in my constituency, at the proposals in the White Paper? Will he recognise that their fears are based on two counts, because they believe, first, that the proposals will affect competition and the quality of the products that they can provide to the industry and the public, and, secondly, that this will have a deleterious effect on jobs in those small and large companies throughout the length and breadth of the country?

Mr. Pattie: I am aware of the points that my hon. Friend has raised. He will not be surprised to hear that they are being taken into consideration.

Mr. O'Brien: Will the Minister assure the House that serious consideration will be given to the points that have been raised, as there is a general feeling in the industry that the manufacture of component parts for the vehicle industry will lead to further redundancies, factory closures and general unemployment? There is a factory in my constituency which manufactures hydraulics and everybody there—from management to shop floor workers—is worried stiff about the future. Does the Minister intend to withdraw the proposals contained in Cmnd. 9712, allow the industry to prosper and thus remove the fear hanging over it?

Mr. Pattie: I think that the industry will be reassured when we are able to come forward with a suitable compromise proposal, which we are at present discussing with it and which I think will meet most of the objections that the hon. Gentleman has raised.

Mr. Colin Shepherd: Is my hon. Friend aware that his comment that the industry will be reassured when he comes forward with proposals will reassure many British manufacturers? Does he recognise that a substantial amount of risk is involved in new investment in new products and that that risk must be rewarded by some form of protection? Does he also recognise that there is limited scope for relaxing his proposals when standard proprietary items are incorporated in an original design?

Mr. Pattie: I agree with my hon. Friend. However, I am sure that both he and the House will not wish me to detain the House on these complicated issues at this stage, other than to say that all these matters are being very carefully considered.

Mr. Loyden: Industry in many cases is very concerned about the implications of the White Paper. Does the Minister not agree that the first thing that should have been done was to indentify the implications of the questions that cause uncertainty in the industry, before the White Paper was produced?

Mr. Pattie: Yes, that is a perfectly fair point. However, we were addressing the fact that it is also important to recognise that a certain degree of copyright protection is needed for original designs. The problem is to balance the respective interests in the motor industry. That is very important.

Mr. Maxwell-Hyslop: Is my hon. Friend aware that the only important point for the retail customer is to know what he is buying? The customer should then have freedom to buy what he wants. My hon. Friend must guard against manufacturers who will not supply spare parts, but only replacement units at hideous cost, which is taking the consumer for a ride.

Mr. Pattie: I am obviously aware of the consumer arguments. We must also recognise, however, that there is a perfectly legitimate case to be made on behalf of those who devise the original spare part, component, or whatever it may be, because they have rights, too.

Mr. Ashdown: Nevertheless, these were Government proposals. Will the Minister explain to the House why the Government believe that their proposals will increase freedom of choice and competition in British industry?

Mr. Pattie: Yes, I will. It is important for the welfare of those in the British automative industry that those who originate designs should have a proper, though not an excessive, degree of protection. That in itself will assist the competitive process.

Mr. Jackson: On the question of the reform of copyright law, will my hon. Friend reaffirm the Government's commitment to abolish the licence of right on pharmaceutical products in the course of the next year?

Mr. Pattie: We have said that we wish to abolish that right as soon as the legislative timetable permits.

Electrical Installation Work (Safety)

Mr. Thurnham: asked the Secretary of State for Trade and Industry what recent representations he has received about standards of safety in electrical installation work in domestic and commercial buildings.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher): I have not received any representations to date, either from private individuals or from official bodies, concerning the standards of safety in electrical installation work in domestic buildings. Questions concerning such work in commercial buildings are the responsibility of my right hon. Friend the Secretary of State for the Environment.
I have, however, recently received a letter from my hon. Friend the Member for Stafford (Mr. Cash) concerning the attempted installation by a private contractor of substandard electric cable in a private dwelling house belonging to one of his constituents. This matter is being examined by the British Approvals Service for Electric Cables (BASEC) and the trading standards department of the local authority concerned.

Mr. Thurnham: In view of the danger of accidents, including loss of life, from faulty installation work, does my hon. Friend consider that those who do this work should be properly qualified and appropriately registered?

Mr. Butcher: As a result of my hon. Friend's substantive question my officials contacted the National Inspection Council for Electrical Installation Contracting for its views on this question. I am advised that there has been no recorded increase in accidents attributable to faulty electrical installation. If my hon. Friend would like to discuss a particular incident in his constituency, I am ready to look into the matter.

Mr. Pavitt: In view of the likelihood of the onset of a wet winter, will the Minister discuss with the Department of the Environment the problem of electrical installation standards in inner city areas where repairs are needed, because a large number of houses are out of date and where, because insufficient sums are available from rates as a result of rate capping, it is impossible to ensure safety for old-age pensioners whose electrical apparatus needs to be renewed?

Mr. Butcher: As the hon. Gentleman will know, that is predominantly a question for my right hon. Friend the Secretary of State for the Environment. I hope he will be reassured that electrical installations in domestic premises are subject to the provisions of the Electricity Supply Regulations 1937, which give appropriate safeguards for the proper wiring of customer premises.

Mr. Squire: Does my hon. Friend recognise that in the whole of installation work, be it electrical, gas or plumbing, we lag behind most other countries in our determination to protect consumers through a system of registration which would allow for those who are properly qualified to be recognised and rewarded?

Mr. Butcher: I have consulted some of the bodies concerned and I am convinced that at present the process of self-regulation is working to the consumers' benefit.

National Infrastructure

Mr. Livsey: asked the Secretary of State for Trade and Industry what recent representations he has received concerning investment in national infrastructure.

Mr. Channon: None, Sir.

Mr. Livsey: Will the Minister heed the advice given recently by the CBI to invest in infrastructure and realise that every job created in the infrastructure costs £8,000, whereas every job created through tax cuts costs £25,000? Is it not a disgrace that the Government have failed to invest in the infrastructure?

Mr. Channon: I do not agree with that. The Government's record on infrastructure spending is extremely good. Total public sector capital expenditure is more than £21 billion a year, capital spending on motorways and roads has increased considerably and National Health Service capital expenditure has also increased. I could give the House millions of examples.

Mr. Richard Page: Is it not true that the regions that are at present making their submissions are doing so to obtain money in their bids from the EEC and are unlikely to put the best complexion on these matters? In answer to the whingeing of the hon. Member for Brecon and Radnor (Mr. Livsey), is it not the case that the shire counties, such as Hertfordshire, have invested hundreds of millions, if not thousands of millions, of pounds in the regions through the redistribution of the rate support grant? Therefore, does my hon. Friend agree that due recognition should be given to the shire counties for the sacrifices that they have made over the years?

Mr. Channon: As I represent part of a shire county, I understand what my hon. Friend is saying. I agree with a great deal of the first part of his remarks.

Mr. Pike: Does the Secretary of State accept that many parts of the deprived regions will be shocked by the complacency of the reply given a few moments ago? We need to spend far more money on the infrastructure to deal with the problems facing us, especially in the north-west and in other deprived regions. When will the Government tackle those problems and get people back to work?

Mr. Channon: I am astonished at what the hon. Gentleman says. In the north-west nearly £1 billion has been spent on regional aid since 1979, the Merseyside development corporation has been created, an urban development corporation for Trafford Park and Salford has been created, there is a commitment to develop Manchester airport, £58 million has been invested in improvements, there are £105 million worth of urban development grants and there has been a 65 per cent. increase in the north-west water services.

Mr. Marland: Does my right hon. Friend agree with the view of all those of us who are regular users of the motorways that the miles and miles of cones that we must work our way around are a vivid example of how much is being spent, not only on motorway repairs, but on improvements in the infrastructure?

Mr. Channon: Motorway cones are a matter for my right hon. Friend the Secretary of State for the Environment. I agree with my hon. Friend that capital spending on motorways and trunk roads has increased by almost 30 per cent. in real terms. Why are Opposition Members so solemn and sour about it all?

Mr. Gordon Brown: With regard to the submission to the European regional development fund on infrastructure and other aspects of Government policy, will the Secretary of State tell us exactly who is responsible for saying that the prospects for reducing unemployment are gloomy, frighteningly bleak, or impossible until fundamental problems of public investment and expenditure are resolved?

Mr. Channon: As the hon. Gentleman knows, the Government make no forecast of future unemployment. We do not think that that would he sensible. Opposition Members are determined, not surprisingly, to make trouble for the years ahead. Under the rules of the ERDF, the Government have to provide assumptions that are used for financial planning purposes only, and they are assumptions, not forecasts. It is the same as the public expenditure survey forecast. The hon. Gentleman is trying to create a great deal of fuss about nothing.

Mr. Hanley: Does my right hon. Friend agree that the views of the hon. Member for Brecon and Radnor (Mr. Livsey) are typical of the views of the Liberal party nationally? I cannot find any local Liberal organisation that will allow expansion of roads, railways, prisons, tunnels or airports in its own area.

Mr. Channon: I entirely agree with my hon. Friend.

British Leyland

Mr. James Hamilton: asked the Secretary of State for Trade and Industry what is the state of the Government's proposals for the privatisation of British Leyland.

Mr. Channon: The position on Leyland Bus and Unipart was announced to the House on 24 July. Since then, Rover Group has announced agreement in principle to dispose of a majority interest in Jaguar Rover Australia. It is also taking forward the disposal of a majority interest in ISTEL.

Mr. Hamilton: Will the Secretary of State give some security and peace of mind to British Leyland, its workers, dealers and its customers, by giving an assurance that there will be no negotiations before a general election about the sale of British Leyland or, for that matter, Land Rover?

Mr. Channon: There are no such plans. I explained the position on Land Rover some months ago, and there is no change in that position. I have already explained what is happening in a number of subsidiaries of the Rover Group. Our policy remains to seek to return the businesses, together or separately, to private ownership. I am awaiting a report from Mr. Day on the financial structure of the company. I have nothing to tell the House beyond that.

Mr. Madel: Whether British Leyland is or is not privatised, will my right hon. Friend assure the House that the Government will not allow it to engage in unfair competition with existing car and truck manufacturers in this country?

Mr. Channon: Yes, I can give my hon. Friend that undertaking. I well understand his concern about events in his constituency.

Mr. Terry Davis: How will privatisation help to solve British Leyland's real problem, which is a sales problem? When will the Secretary of State ask the directors of British

Leyland to do something about the failure of the company's sales and marketing management to sell the vehicles that they are employed to sell, instead of constantly calling for redundancies among the men and women who work in the factories, who have significantly improved both quality and productivity and who are then rewarded with the sack?

Mr. Channon: The hon. Gentleman is being most unfair and unreasonable, which is not typical of him. I have asked Mr. Day to do his utmost to try to improve the commercial performance of the Rover Group, which is in everyone's interests. The group is making considerable strides in quality, production and output, and is doing extremely well. I am asking Mr. Day to look at the whole commercial future of the Rover Group and I look forward to receiving his proposals. I am sure that they will be received enthusiastically by the hon. Gentleman.

Mr. Beaumont-Dark: Do the privatisation plans that have been announced mean that the money that will then be released will be available for reinvestment in the Rover Group, bearing in mind the excellent new car — the Sterling—which has a splendid future if it has the right investment, for which Mr. Day is asking?

Mr. Channon: All questions about investment in the Rover Group will have to await Mr. Day's report. I am naturally in agreement with my hon. Friend about the quality of the Rover Group's cars and I only wish that more people, both inside and outside the House, would buy them.

Mr. Nellist: How seriously can we take the Secretary of State's list when the privatisation from British Leyland of Self-Changing Gears in Coventry took place in June without any announcement to this House until it was squeezed out of the Secretary of State in a written answer? Despite promises about the safety of the company in the harbour of Cummins Engines, within 12 weeks of privatisation 20 per cent. of jobs were lost. How seriously can we take the list when that sort of thing happens?

Mr. Channon: Surely all hon. Members know that in order to stay in business a firm has to win sufficient orders. It is unfortunately the case with Self-Changing Gears that its failure to win sufficient orders resulted in job losses.

Mr. Forth: Can my right hon. Friend give me assurances about the proposals for ISTEL in my constituency? Will he assure me that sufficient weight will be given in considering the management buy-out proposals to the strength of the skills of the existing staff and that those skills will be fully weighed against any financial considerations which might otherwise be considered alone?

Mr. Channon: As I told the House, I am awaiting the assessment from the Rover Group of its majority interest in ISTEL. I will, of course, bear in mind what my hon. Friend has said.

Mr. Hoyle: Will the Secretary of State please confirm that the instructions given to Mr. Day are to talk to everyone with a view to privatising Austin Rover? Why are the Government in such a hurry to sell off an indigenous car manufacturer? Do they not want a British stake in the motor industry, and are they not worried about the loss of jobs?

Mr. Channon: The hon. Gentleman is misleading the House, I am sure unintentionally. The instructions given to Mr. Day are to run this company commercially and to get it into a good commercial state in the interests of all concerned. The Government were elected with a manifesto commitment to privatise the group and our policy remains to seek to return the businesses, together or separately, to private ownership. No doubt that will take a considerable time.

Mr. Budgen: Will my right hon. Friend make it plain to private investors that he is genuinely open to all suggestions for the sale, investment or collaboration in respect of British Leyland and that he is not merely marking time until the next general election?

Mr. Channon: My hon. Friend will realise from the list that I read to the House of the parts of the Rover Group that are being disposed of that an energetic programme is proceeding on that front. I am sure he welcomes that, and I endorse what he said.

Mr. John Smith: The Government caused deep worry to everyone in the Rover Group when their surreptitious proposals to sell it off to the Ford Motor Company were revealed earlier this year. In view of that, do the Government not owe to the people who work for the Rover Group a solid commitment to see it through to commercial success? Is it not more important to maintain and expand its production than to seek to privatise it? Will the Secretary of State give the House an undertaking that if proposals by Mr. Day are to reduce substantially the volume of production in the Rover Group he will reject those proposals?

Mr. Channon: I had better wait to see what Mr. Day says before I commit myself to reject or accept anything that he puts forward. I do not agree with the right hon. and learned Gentleman about a surreptitious attempt to sell off the Rover Group or the effect that such a thing would have on the commercial future of the group. The Rover Group, and other car companies in Britain, must depend for commercial success on quality, price, reliability and delivery. Rover has an excellent story to tell on those points and I hope that it will achieve commercial success, because that is the Government's policy.

Takeover Bids

Mr. Greenway: asked the Secretary of State for Trade and Industry how many takeover bids have been referred to the Monopolies and Mergers Commission in the past 12 months; with what result; and if he will make a statement.

Mr. Channon: In the 12 months to date, 14 acquisitions or proposed acquisitions have been referred to the Monopolies and Mergers Commission. Of these, four proposals were abandoned and the references laid aside. One proposal was found by the commission to operate against the public interest, three were found not to operate against the public interest and six investigations are still in progress.

Mr. Greenway: May I respectfully point out to the hon. Member for Brent, South (Mr. Pavitt) that the Ault and Wiborg paint company which he mentioned is in my constituency and not in Brent? He ought to know his own constituency a little better. However, I agree with much of

what he said. Is my right hon. Friend aware that many of my constituents are under 90 days' notice while the proposed takeover by Hoechst or Bergers is being investigated? Does he not agree that this is unfair to both parties? I hope that he will refuse to allow that takeover to occur. Meanwhile, will he say whether the referral process could be speeded up, in the interests of all parties?

Mr. Channon: I note the alliance between the hon. Member for Brent, South (Mr. Pavitt) and my hon. Friend. I can assure my hon. Friend that I will expect to listen to the advice of the Director General of Fair Trading if this merger qualifies on assets or market share. I cannot anticipate the result of the director general's inquiries. My hon. Friend also asked about the delay in Monopolies and Mergers Commission procedures. I am certainly prepared to consider whether there are circumstances in which the commission might be asked to report in a shorter period. The current review will consider that.

Dr. Godman: The Director General of Fair Trading is examining a proposal to take over the British Sugar Corporation. Will the Secretary of State head off that takeover by the Italian company, Ferruzzi? Is he aware that that company seeks, not a monopoly of the British sugar market, but a monopoly of the European market? If it is successful, the interests of the producers in the African, Caribbean and Pacific cane sugar-producing countries will be severely harmed, and so will the interests of those employed in the United Kingdom's cane sugar refineries.

Mr. Channon: I note the hon. Gentleman's views. The proposed takeover of British Sugar by Tate and Lyle and Ferruzzi is being investigated by the Monopolies and Mergers Commission. The hon. Gentleman will understand that it would be quite inappropriate of me to comment at this stage or to anticipate the commission's recommendations.

Mr. Gale: Further to the answer given to the hon. Member for Workington (Mr. Campbell-Savours), and to set the record straight, will my right hon. Friend confirm that, following its successful defence of the Scottish and Newcastle takeover, during which Matthew Brown suggested that Scottish and Newcastle might wish to close one of its breweries, the first thing that the Matthew Brown management did was to close one of its breweries? Consequently, does my right hon. Friend agree that small is not necessarily secure? Does he further agree with the general principle that it is better to have a large domestic industry that is able to compete with European companies than a fragmented industry that cannot do so?

Mr. Channon: All the questions show that hon. Members have a keen interest in this topic. I shall await their views as to what, if any, changes should take place in our competition policy.

Mr. Heffer: Will the Secretary of State give an assurance that some time, somewhere, this Government will actually defend the interests of British industry?

Mr. Channon: With respect, that question is untypical of the hon. Gentleman, and most unfair.

Mr. Peter Bruinvels: I welcome the sterling work done by the Monopolies and Mergers Commission, but does my right hon. Friend realise that many of my constituents are particularly concerned about the delays in reaching


decisions on the Plessey and Allied-Lyons cases? Will he confirm that there has been great concern about the cartel operated by some petrol companies? Is there not a case for the Monopolies and Mergers Commission to look into that?

Mr. Channon: The Director General of Fair Trading has looked at that latter point several times. I have already said that we shall try to find ways of speeding up such decisions, although I think that that will be difficult without further legislation. The GEC-Plessey matter was decided this summer, and I seem to remember that most of the House agreed with the decision reached.

Mr. Meadowcroft: Is the Secretary of State aware that today several redundancies have been announced at the Royal Ordnance factory in Leeds as a direct result of Vickers buying out its sole competitor? Would it not have been better if that takeover had been referred to the Monopolies and Mergers Commission?

Mr. Channon: I do not agree with the hon. Gentleman. I followed the recommendation given to me on that occasion by the Director General of Fair Trading, that there would be no detriment to competition. Consequently, I thought that it was unreasonable to refer the matter to the Monopolies and Mergers Commission.

Airbus Project

Mr. McCrindle: asked the Secretary of State for Trade and Industry if he has yet received an application from British Aerospace for launch aid in connection with the Airbus A330/A340 project; and if he will make a statement.

Mr. Pattie: My Department received an application from British Aerospace for launch aid in respect of the proposed Airbus A330/A340 programme on 20 October. A detailed appraisal of the application has been set in hand.

Mr. McCrindle: If my hon. Friend accepts that Airbus can be truly competitive with the large American aircraft manufacturers only if it can offer airline customers a broad range of products, is he aware that several of us hope that the Government will react favourably towards the application from British Aerospace, especially as launch aid was provided for the A320?

Mr. Pattie: I note my hon. Friend's remarks. He will recall that the success rate of the A320 programme appears to be very encouraging, offering the prospect of a reasonably early repayment of that launch aid. We understand the case being made about the family of aeroplanes. At present, Airbus is engaged in a marketing operation on the A340 in order to establish the level of airline interest in that aeroplane.

Mr. Geoffrey Robinson: Can the Minister confirm that a decision on the application by British Aerospace is expected before the end of this year? Will he take that decision irrespective of any collaboration with McDonnell Douglas? Will he confirm that the British Aerospace and Airbus Europe decision stands on its own right and will be considered in that light, that the £750 million launch aid is acceptable in principle to his Department and that we can expect a decision before the end of the year?

Mr. Pattie: The hon. Gentleman would not expect me at this stage, when 1 have just told the House that the

detailed appraisal has just been set in hand, to say what level of expenditure is likely to be acceptable to the Government. We have to take into account the market opportunities for one of the aeroplanes in particular.
British Aerospace seeks and expects a decision from the Government in the first quarter of next year, not before the end of this year.
When I met my ministerial colleagues during the Farnborough air show to discuss whether the talks with McDonnell Douglas should be suspended, it was agreed that Airbus had asked for that suspension and that the suspension should take place to give Airbus the opportunity to market the A340 without suggestions that it would go in with McDonnell Douglas.
I believe that there are advantages in the longer term in certain of the other programmes, such as the stretch version of the A320, where co-operation with McDonnell Douglas could be fruitful.

Mr. Stern: Has my hon. Friend seen the forecast of the expected market for aeroplanes of the size of the A340 up to and including the year 2005? Does he agree that the forecasts are extremely encouraging, and will he bear them in mind when evaluating the application for launch aid?

Mr. Pattie: Yes, I have seen the forecasts. Those are precisely the types of factors that we want to take into account to see whether those forecasts accord with the forecasts that we and others are making.

British Leyland

Mr. Nellist: asked the Secretary of State for Trade and Industry what arrangements his Department makes for the monitoring of progress of companies privatised from British Leyland where that company retains an interest.

Mr. Giles Shaw: There are no special arrangements beyond the normal role of the Department in its sponsorship of private sector companies.

Mr. Nellist: I am tempted to ask why not. Coventry Climax was privatised from British Leyland in 1981 and it has lost 80 per cent. of the original 3,000 jobs, with not a penny being paid to British Leyland by the consortium that took it over. Do the Government not feel any responsibility for such a conspicuous failure of privatisation? When the Government promise a secure future for workers, should they not monitor before failure occurs? Why was such monitoring not exercised by the Government?

Mr. Shaw: The hon. Gentleman will be interested to know that the British Leyland position in regard to the problem is fully protected. Coventry Climax has been through a difficult time in the sale and marketing of its products and it is currently in the hands of the receiver. It would, therefore, be wrong for me to make any further observation about the existing company.
In relation to privatisation and jobs, the hon. Gentleman will be aware that 1,500 more jobs at Jaguar have been created since privatisation. Its profit record is now £121 million on the 1985 returns, as opposed to a loss of £32 million in 1981.

Mr. Robert Atkins: Does my hon. Friend agree that companies privatised with British Leyland, as well as those that are still within the group—for example Leyland


Trucks—have done everything asked of them by the Government in terms of quality and marketing support, but that, none the less, the market is too small to take the number of products produced? Will my hon. Friend confirm the importance of giving Government support for export sales through loans, credit arrangements and in leading an attack into the market that is so important for companies such as Leyland Trucks?

Mr. Shaw: I accept my hon. Friend's point in relation to Leyland Trucks. He will be aware that there is substantial over-capacity in the trucks business in Britain and probably worldwide. That is why he will, no doubt, welcome, as I did, the arrangements announced by Mr. Day in Paris vis-a-vis the Daf company. In relation to overseas exports, the Export Credits Guarantee Department stands behind many British companies in their fight to obtain a fair share of overseas markets.

Mr. John Smith: As Coventry Climax is now in receivership, and as, at the time it was sold off from British Leyland a bright future was promised to the work force, should not someone who initiated that privatisation give an apology to them for what has happened? In so far as it is now the receiver's proposal to sell off the business, perhaps in parts, is it the Government's intention to permit the receiver to sell to the highest bidder irrespective of the consequences for the west midlands economy of the loss of substantial engineering industries?

Mr. Shaw: I understand the right hon. and learned Gentleman's natural anger at the fact that the privatisation of the company has not proved successful, but I must confess that it surely is right to see that a company can market its goods and services without subvention from the taxpayer. In the case of Coventry Climax, as the right hon. and learned Gentleman well knows, there have been difficulties for it in achieving its sales performance. That could happen to any company, and the right hon. and learned Gentleman knows full well what the consequences of that would be. The receiver's task is to seek to dispose of assets and to obtain a realistic return for the creditors of the company, and that is in his and the creditors' best interests.

Land Rover

Mr. John Mark Taylor: asked the Secretary of State for Trade and Industry if he has received any representations about restoring Land Rover to the private sector.

Mr. Giles Shaw: The position has not changed since my right hon. Friend's statement on 24 April.

Mr. Taylor: Does my hon. Friend agree that, with the problems overhanging the volume car market in Britain, about which we all know, there is really no reason to leave Land Rover in the same embrace? Will my hon. Friend be speaking to Mr. Graham Day about the possibilities of offering that company to the British shareholder?

Mr. Shaw: I understand my hon. Friend's views and I witnessed his robust performance on television recently. However, my hon. Friend and I should await the corporate plan proposals that Mr. Graham Day is now preparing.

Mr. Hoyle: Would it not be better to leave Land Rover where it is, with British Leyland? Does not all this selling

off and disturbance, particularly of the profit-making parts, mean that all that will be left is a loss-making rump, parts of which will either go out of business or face vast redundancies? Does the Minister not care at all?

Mr. Shaw: The hon. Gentleman must be patient. It is important to see that all parts of the Rover Group are profitable, and I hope that they will be. That would be the ideal objective, hence the massive effort being made by Mr. Day and his colleagues, not just to restructure the company, but to make a massive effort on the commercial development of the range of products that they possess. Some of the success stories within the volume car group, including the 25 per cent. increase in the Rover 200 sales compared with a year ago, show that they have been successful.

Mr. Alan Howarth: When my hon. Friend is considering questions relating to the privatisation of Land Rover, or, for that matter, of British Gas, will he bear in mind that the Japanese authorities are not permitting foreigners to apply for shares in Nippon Telegraph and Telephone when it is floated later this month? Does he agree that it is an important point of principle that there should be reciprocal openness in financial markets? Will my hon. Friend and his colleagues be willing, as circumstances may require, to invoke the reciprocity clauses of the Financial Services Bill?

Mr. Shaw: I admire my hon. Friend's ingenuity in tacking that supplementary question on to a question about Land Rover. However, I take his point that there should be a free market in investment as well as in sales.

Telecommunications (Competition)

Mr. Weetch: asked the Secretary of State for Trade and Industry when he last met the Director General of OFTEL to discuss competition in the telecommunications industry.

Mr. Pattie: My right hon. Friend last met the director general on 16 October.

Mr. Weetch: I thank the Minister for that answer. When he next meets the Director General of Oftel, will he tell him that in the course of a recent adjudication on a competitive tender by British Telecom in the Ivory Coast, one of my constituents, Jonathon Wash, part of the personnel of BT, was killed in doubtful circumstances, and I suspect foul play? Will he, through the Director General of Oftel, prevail on BT to lift the conspiracy of silence on the matter?

Mr. Pattie: I am sure that the first thing that the House would want me to do is to express sympathy to the family of the hon. Gentleman's constituent who has met his end in that way. We have no locus in the matter of requiring BT to make information available to him. However, I know that the chairman of BT reads the proceedings of the House with particular care, and this exchange may well produce the effect that the hon. Gentleman seeks.

Mr. Hickmet: Will my hon. Friend bear in mind that, in the supply of telecommunications equipment to British Telecom, system Y was won on merit by Thorn-Ericson, and will lead to the creation of 700 to 1,000 jobs in my constituency? Will he also bear in mind that GEC, despite having numerous friends on both sides of the House and in high places, failed to win the contract because of the


failure of system X? Will he ensure that the Director General of Oftel is not subject to undue pressure from any quarter?

Mr. Pattie: Anyone who has met the director general will know that he is unlikely to take lightly pressure from any quarter. I am sure that it is best to leave the merits of prospective systems to be tested in the market place.

British Shipbuilders

Mr. Holt: asked the Secretary of State for Trade and Industry what current proposals he has to privatise British Shipbuilders.

Mr. Giles Shaw: The long-term objective is to return as many of British Shipbuilders' yards as possible to the private sector when circumstances permit.

Mr. Holt: I thank my hon. Friend for that answer. Will he comment on the rumours that are sweeping Teesside that the Cuban order, which was likely to keep Smiths Dock open, is now going to the Wear shipyards? Is there not time, even now, for Smiths Dock to be reprieved in view of these rumours?

Mr. Shaw: I am aware that rumours have been circulated to that effect, but I cannot comment upon them now because I do not have the up-to-date information. My information was that negotiations on the Cuban order had still some considerable way to go. My hon. Friend will know why it was that British Shipbuilders decided that it saw no further need for the capacity of Smiths Dock. That is why it deemed it right to dispose of it and to sell the assets that it contained.

Mr. Gordon Brown: Will the Minister accept that so far the privatisation of the shipbuilding industry has meant job losses in the privatised sector and has threatened the viability of the public sector? Will the Minister face his responsibilities to an industry which has gained less than 1 per cent. of world orders this year? In the negotiations over the European intervention fund, will he stand up for

a better deal from the fund than the one that is foreshadowed in the draft directive which the Government seem prepared to accept?

Mr. Shaw: I can assure the hon. Gentleman that I shall fight extremely hard in the negotiations over the European intervention fund, which I believe to be a crucial component for United Kingdom shipbuilding. I think that the hon. Gentleman should be careful before he suggests that the industry's problems can be solved by shipbuilding remaining in the public sector. He knows well that a number of significant orders have come to sectors that have been privatised. I trust that he welcomes the announcement made today that the Atlantic Conveyor will be stretched at the Scott Lithgow yard.

Mr. Hoyle: On a point of order, Mr. Speaker.

Mr. Speaker: Does the hon. Gentleman's point of order arise directly from questions and not amount to a continuation of questions?

Mr. Hoyle: It arises directly from questions, Mr. Speaker.

Mr. Speaker: Very well.

Mr. Hoyle: I seek your guidance, Mr. Speaker. I do not wish to be critical, but is it right that an hon. Member should come into the Chamber when a question is being asked and thereafter rise in his place and be called to ask a supplementary question?

Mr. Speaker: Yes, that is perfectly in order.
Later—

Dr. Godman: I wish to raise a point of order, Mr. Speaker, which refers specifically to the last answer given by the Minister of State to my hon. Friend the Member for—

Mr. Speaker: Order. That matter could come into the category of a continuation of Question Time. I do not think that I can take it because, as the hon. Member said, it refers to an answer given by the Front Bench, which patently cannot be a matter for me.

Master J. R. Bickford Smith

Mr. Brian Sedgemore: On a point of order, Mr. Speaker. I wish to raise a point of order with you of which I have given you notice. Last December I criticised the senior Master in the Royal Courts of Justice, Master J. R. Bickford Smith, and a firm of solicitors, Elborne, Mitchell and Co., in a debate in this place. I wrote subsequently to the Lord Chancellor and asked him to set up an inquiry. There was considerable correspondence between us and since then I have heard nothing.
I wish, Mr. Speaker, to raise three matters with you in relation to the incident to which I have referred. Although I have heard nothing, yesterday the Lord Chancellor replied to the inquiry by way of a planted written question, which was answered by the Attorney-General. The question was tabled by an hon. Member who is a little fellow from one of the Leicester seats. You will know him, Mr. Speaker, because he prattles on but cannot be seen because he is so small.
My first point, Mr. Speaker—[Interruption.]

Mr. Speaker: Order. This is an important matter.

Mr. Sedgemore: My first point is this: is it not a gross abuse of both Houses for the Lord Chancellor and the Attorney-General to conspire in this way to answer a query put by an hon. Member in this fashion?
My second point—it is even more important—is this: the Attorney-General's answer impugns the integrity of a private solicitor as well as myself. I take no exception to the Attorney-General impugning my integrity, if he so wants, on the basis of an unreliable witness who told a whopping great lie and who can be seen most days wandering around the Royal Courts of Justice in his masonic pinny and severed trousers.
I question the use of the parliamentary question and answer procedure. I have always been under the impression that if an hon. Member wishes to criticise another, he either has to put down a substantive motion, something which I have often done, or he has to be prepared to give notice to the hon. Member and debate the matter in the House. I may be wrong about that. It may be perfectly legitimate for the Attorney-General to use the answer to a written question to impugn the integrity of hon. Members, but I am sure you will agree, Mr. Speaker, that it is a matter of importance both in principle and in practice. When I become a Minister, will I be allowed to do it?
My third point is this: in his answer, the Attorney-General impugned my integrity for attacking one of the judges and has said—I believe rightly—that one can attack a judge only by a substantive motion. The only person whom I attacked in that debate was Master Bickford Smith. Master Bickford Smith is not, never has been and never will be a judge. The Attorney-General sought to widen the interpretation by saying that that rule applies not only to judges but to senior judicial figures. I ask, Mr. Speaker, where one draws the line as to who is and who is not a senior judicial figure.
Let us consider the Lord Chancellor's son. He is a barrister and a Minister—a Member of this House. Is he a senior judicial figure? When I was in chambers with

him, we used to call him a weak-chinned, bespectacled swot. Be that as it may, I ask you, Mr. Speaker—[Interruption.]

Mr. Speaker: Order. That expression may not be unparliamentary, but it is undignified.

Mr. Sedgemore: I ask you, Mr. Speaker, to rule on these matters. I like the Lord Chancellor. Everything that I learnt at the Bar was learnt in his chambers, where I was a pupil to Mr. Justice Maurice Drake.

Mr. Speaker: I thank the hon. Member for having given prior notice of his point of order. He has raised a major matter. I should like a little time in which to consider it before I give a ruling.

Mr. Peter Bruinvels: Further to the point of order—

Dr. Norman A. Godman: Further to the point of order—

Mr. Speaker: Order. One at a time.

Mr. Bruinvels: Further to the point of order, Mr. Speaker. I wish to put the record straight on this matter. Obviously, I am particularly envious that you had prior notice of this matter. I did not. I appreciate that the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) is concerned that a shorter Member than he actually got the right answer, but I refute the fact that I asked a flagrant planted question and that I had showed some interest in this case. I seek a withdrawal of the unfortunate allegation —[interruption]

Mr. Speaker: Order. Some years ago I heard the phrase "planted question", but I do not know what it means.

Mr. Richard Hickmet: Further to the point of order, Mr. Speaker. I seek your guidance in this matter. So far as I am aware, during the lifetime of this Parliament, the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) has libelled numerous members of the public—professional men—using the cloak of parliamentary privilege. How much is it in order for that to be done? How far does it demean the traditions of the House that that is permitted? How should hon. Members conduct themselves in relation to the matter? The hon. Gentleman today again libelled professional men. If he did that outside the doors of the Chamber, he would face a libel writ that would bankrupt him.

Mr. Sedgemore: Further to the point of order, Mr. Speaker. I am sorry to disappoint the hon. Member for Glanford and Scunthorpe (Mr. Hickmet) but, in fact, the private solicitor and I held a press conference this morning. The private solicitor not only bitterly criticised and challenged the lies of Master Bickford Smith but took on the Lord Chancellor and the Attorney-General. It has been done outside. If these people — [HON. MEMBERS: "What about you?"] I have also released to the press my correspondence with the Lord Chancellor. If these people want to take out writs—I know that they will not—they can do so.

Mr. Hickmet: Further to the point of order, Mr. Speaker. Master Bickford Smith is constrained by the rules of the Supreme Court from issuing a writ against that so-called hon. Member, as well he knows.

Hon. Members: Oh.

Mr. Speaker: Order. Let me clear up this matter in relation to what the hon. Member for Glanford and Scunthorpe (Mr. Hickmet) said. We have in this place, and we shall be claiming it after the State Opening next week, freedom of speech. Every hon. Member has freedom of speech. Of course, he has to exercise it with discretion as he sees it, but that is entirely a matter for the hon. Member concerned.

Hon. Members: Make him withdraw it.

Mr. Eric S. Heifer: Further to the point of order, Mr. Speaker. The hon. Member for Glanford and Scunthorpe (Mr. Hickmet) referred to my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) as the "so-called hon. Member". I think that that statement demands that he withdraw it immediately.

Hon. Members: Hear, hear.

Mr. Speaker: I did not hear the hon. Member say "so-called hon. Member". We must keep to the rules of the House. We always refer to each other in this place not by our surnames but by our constituencies. If the hon. Member for Glanford and Scunthorpe said those words, I am sure that he would wish to withdraw them.

Mr. Hickmet: We are all hon. Members and we have to discharge that obligation which is upon us. The hon. Member for Hackney, South and Shoreditch knows the best description that fits him.

Hon. Members: No—withdraw!

Mr. Speaker: Order. In the interests of good order, I ask the hon. Member to refer to the hon. Gentleman by his constituency and not as a so-called hon. Member.

Mr. Hickmet: I withdraw.

Prime Minister's Questions

Mr. Speaker: I have two statements to make. The first arises out of Question Time yesterday. After questions yesterday I promised to reflect on the interventions I had made in an effort to ensure that supplementary questions to the Prime Minister were confined to matters within her responsibility. In subsequent exchanges, the hon. Member for Warley, East (Mr. Faulds), in a helpful way, asked that we should revert to the practice whereby such supplementary questions were prefaced with some remarks which were relevant to the Prime Minister's activities on the day on which the question is put. I agree with this approach and would ask hon. Members to make it clear early in their question that the question concerns matters within the Prime Minister's responsibility.
So far as my rulings yesterday are concerned, I believe that my intervention in the question of the hon. Member for Gillingham (Mr. Couchman), which was about happenings in Manchester city council as reported in the Daily Telegraph, was correct. Subsequently, I intervened in a supplementary question by the hon. Member for Manchester, Blackley (Mr. Eastham), which up to that point had consisted of a fairly lengthy preamble about the Japanese economy. I now recognise that that preamble was probably intended to lead to a question about this country's economy. In those circumstances, my intervention may have been over-hasty, although I should emphasise that its purpose was to try to make certain that supplementary questions were brief and in order and that hon. Members still hoping to be called would he given a chance to question the Prime Minister. In these circumstances, I hope that the hon. Member for Blackley will accept my apology. I will try, as I hinted yesterday, to compensate him in some appropriate way.
Having said that, I hope that I shall have the support of the House in my efforts to ensure that questions to the Prime Minister deal with matters for which she is responsible.
Later—

Mr. Ken Eastham: On a point of order, Mr. Speaker. I thank you for your generous statement. A Back-Bench Member rarely receives a statement from the Speaker such as the one that I received today, and I will savour this occasion for many a long month.

Mr. James Couchman: Further to that point of order, Mr. Speaker. May I also thank you for your consideration when you intervened on my question yesterday? I fully accept your judgment that I was out of order. I hoped to bring it round, and I hope that I may have a chance to ask the Prime Minister a question similarly in the very near future.

Mr. Andrew Faulds: Sir, in respect of your statement, may I say how obleeged I am and how obleeged I am sure the House is?

Mr. Speaker: I thank all hon. Gentlemen concerned for their generosity.

Standing Orders

Mr. Speaker: I have a second statement to make.
The House's public business Standing Orders have grown over many years. As new Standing Orders have been added, their arrangement has become somewhat confusing. Therefore, the Clerk of the House has, with my authority, rearranged the Standing Orders into a more rational sequence. I am sure that this will be for the convenience of hon. Members.
The Procedure Committee has been informed of the intention to rearrange the Standing Orders and has raised no objections. I must emphasise that the substance and application of the Standing Orders remains completely unchanged. All the Standing Orders have been renumbered. The new numbers will be shown clearly in the new publication, with convenient conversion tables from the old numbers.
I should perhaps draw the attention of the House to one change. Standing Order No. 10 — "adjournment on specific and important matter that should have urgent consideration"—with which we are all familiar will in future be Standing Order No. 20. The rearranged Standing Orders will come into use on the first day of the new Session.

Mr. Mordecai Vanunu

Mr. Anthony Beaumont-Dark: As this is a good day for contrition all round, may I express my regret that my acute disappointment yesterday led me astray in implying, improperly, that you, Mr. Speaker, have ever been unfair. Obviously, the unfairness lay with me. I apologise for that.
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the disappearance from this country of Mr. Mordecai Vanunu.
Two years ago, Mr. Dikko, a former Nigerian Minister, was found drugged in the hold of an aircraft. At that time, there was, rightly, an outcry in the House. Now, Mr. Mordecai Vanunu has vanished from a London hotel and, like a rabbit out of a hat, has appeared in Israel. He went through no normal recognised channels, but he was in this country one day and a short time later was in Israel.
Mr. Vanunu took the state's shilling and betrayed its trust. That is odious, but it is not the point of asking the House to become involved in the matter. Civilised countries cannot expect to pluck someone at will illegally from another country as though he were cargo. How did Mr. Vanunu get out of Britain? Mossad seems to be implicated, but no explanation has come from Israel, except that the matter is too secret to be discussed there. However, no matter which concerns a person who suddenly disappears and reappears somewhere else can be too secret to be discussed in this House. I believe that this type of thing should leave a chill, because there is an implication that if the motive is worthy, a country may do what it will in another country. That cannot be right.
I believe that the House should be given all the information that is at the disposal of Her Majesty's Government so that we at least know that our Government have reacted and are acting properly in this serious matter. That is why I have taken the time of the House to call for the Adjournment on this matter.

Mr. Speaker: The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has asked leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the disappearance from this country of Mr. Mordecai Vanunu.
I have listened with great care to what the hon. Gentleman has said. I regret that I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 10, and I cannot submit his application to the House.

Mr. Tony Marlow: On a point of order, Mr. Speaker.

Mr. Speaker: Not on that matter, I hope.

Mr. Marlow: I do not in any way challenge what you have said, Mr. Speaker. Obviously, you are aware of the diplomatic significance of these matters. There was an issue with the Syrian embassy, action was taken with regard to the embassy and there was a statement in the House. The world looks upon this House to be objective. I wonder how we can get a statement, a question or some


explanation from a Minister as to what the Government know about what seems to be a sinister issue. Our status in the world and our objectivity in the middle east depend upon the House being able to find out the truth and the reality behind the situation.

Mr. Dennis Skinner: If you manage, Mr. Speaker, to follow the advice that has been given by the hon. Member for Northampton, North (Mr. Marlow) in trying to ascertain some more information for the benefit of the House, would you bear in mind that the whole affair may lead us to Johnson Matthey bank, Abdul Shamji and, who knows, Conservative Central Office?

Mr. Speaker: My ruling is concerned only with whether this matter should have precedence over the business set down for today or tomorrow. As to the wider issues, I do not in any way underestimate what was said by the hon. Member for Northampton, North (Mr. Marlow) or what was contained in the submission of his hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). These are serious and important matters. The hon. Member for Selly Oak must find other ways of seeking to obtain his objective, but he cannot do so, unhappily, under Standing Order No. 10, for the reasons I have given.

Insurance Companies

Mr. William O'Brien: I beg to move,
That leave be given to bring in a Bill to amend the law relating to the commutation of insurance policies and contracts.
I am sure that the House will agree that this week or this month, as in every other week or month, some person will surrender their life assurance policy because they cannot afford to continue the payments, for some other reason which could be justified. The case which prompted me to introduce this Bill was when two people decided to marry, each owning an assurance policy. They decided to surrender their individual policies and take out a joint policy which was more suitable to their needs as a married couple.
The present code of practice applied by assurance companies concerning the discontinuation and surrender of life assurance policies is, in my opinion, ambiguous, does not work, and in no way helps, assists or protects policyholders.
The purpose of my Bill is to give protection to people who enter into an agreement with an assurance company, to ensure that a proper and understandable code of practice is introduced and carried out and that fairness is applied at all times to policyholders. The present code of practice states:
The intermediary shall draw attention to the long term nature of the policy and to the consequent effects of early discontinuance and surrender.
When asked about the consequent effects in real terms—that is, what the policyholder would lose on surrender after two, three or more years—no one can say what they will be. My experience is as follows. A person takes out a life assurance policy with Pearl Assurance, for 10 years. After making payments for nearly two years, the person requests advice on how to obtain a different policy to cover herself and her husband. After making repeated requests for advice and obtaining no satisfaction, the only course open to her is to surrender the policy. Over the period that the policy was in being £156 was paid to the insurance company. Following surrender £106 is paid to the policyholder. In other words, one third of the money paid to the company by the policyholder, plus interest, is retained by the company. On reflection, it could appear that the insurance company preferred the policy to be surrendered than to give additional advice.
When dissatisfaction is expressed by the policyholder and an explanation is requested as to why so much money is deducted from the payments made, it is said that in the early years of the policy commission to the agent, stamp duty, costs and servicing the business are the real reason for the deduction. Even if one accepts that the point made by the actuary for the insurance company is correct, and that there are initial charges, to take over 32p in the pound for every pound paid is exorbitant and most unsatisfactory.
Some policyholders do face genuine hardship. I witnessed people having to surrender insurance policies during the miners' strike, and there is the case I have just referred to, and last weekend, when I held advisory meetings throughout my constituency, a further case was brought to my notice of a person who lost his job in his early sixties. When his employment benefit period had ceased, he applied to the Department of Health and Social


Security for supplementary benefit. He was asked what capital he had and what other investments he held. Being the truthful person he is, he declared that he held a life insurance policy. He was told to inquire what the income would be from the asssurance policy if it had to be surrendered. When he had obtained the full information and reported back to the DHSS, he was told to surrender the policy, and for a year or so he has had to provide for himself and his wife on the income from his assurance policy and his savings. When I asked my constituent about his assurance cover he naturally replied that the cover ended when he surrendered the policy.
One can see that that case introduces a different dimension, in which the Secretary of State for Social Services becomes involved. However, I repeat that such action towards policyholders puts them at the mercy of insurance companies and the discretion of the actuary or any other person who decides how much should be paid to policyholders when the policy is discontinued and how much should be retained by the company.
I could quote other cases and examples. I make the plea that there should be some protection for those people by law against insurance companies which, without explanation, deduct over 30 per cent. from payments made on life assurance policies.
If an actuary of an insurance company makes a judgment about how much should be deducted from payments for a life assurance policy, regardless of how long the policy has existed for, the insurance company should make a statement showing what the money that is being retained covers. If the policyholder is not satisfied with the information received, or if answers are not forthcoming, he should be able to appeal to the Registrar of Friendly Societies with confidence because of information that he will have obtained if my proposals are accepted.
We should also consider more information being given to people who intend to take out assurance policies. More information should be given during the interview about the consequences of early surrender or if the policy is discontinued. More information about what a person would lose if the policy were discontinued could be given, rather than just leaving it to the intermediary to draw attention to the consequences.
My Bill refers to the money paid by the policyholder. He should know how his money is divided and who receives what payment for what service. I beg the House to accept the Bill because it is in the best interests of policyholders and offers a more democratic procedure for assurance company practices.

Question put and agreed to.

Bill ordered to be brought in by Mr. William O'Brien, Mr. Walter Harrison, Mr. Terry Patchett, Mr. Alec Woodall, Mr. Ron Lewis, Mr. Geoffrey Lofthouse, Mr. Doug Hoyle and Mr. Allen McKay.

INSURANCE COMPANIES

Mr. William O'Brien accordingly presented a Bill to amend the law relating to the commutation of insurance policies and contracts: And the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed. [Bill 232.]

Orders of the Day — Housing and Planning Bill

Lords Reason for insisting on their amendment to which the Commons have disagreed and disagreeing to the amendment made by the Commons in lieu thereof, considered.

Lords Reason:
The Lords insist on their amendment to insert a new clause before clause 1—Exception to the right to buy with respect to dwelling houses for persons of pensionable age—and disagree to the amendment proposed by the Commons in lieu thereof for the following Reason:
Because the said Commons amendment fails to provide adequate safeguards for the stock of local authority rented accommodation specially suitable for people of pensionable age.

The Minister for Housing, Urban Affairs and Construction (Mr. John Patten): I beg to move, That this House doth not insist on its disagreement with the Lords amendment.
The issue here is the exclusion from the right to buy of non-sheltered housing for the elderly, which is a serious matter. The House will recall from our debate last Monday that the Lords amendment would do two things. First, it would simplify the test of suitability which houses and flats must meet it they are to be exempted from the right to buy. Secondly, it would take decisions away from the Secretary of State, where they now lie, and put them in the hands of local authorities.
The Government made a reasonable and constructive response to the first of those proposals. We accepted the case for simplifying the test but, on the second issue, we felt unable to agree for the reasons that I explained. The Government amendment, which was carried in the House on Monday, would have ensured that decisions remained with the Secretary of State. That is the point at issue between us.

Mr. Frank Dobson: It was.

Mr. Patten: By insisting on its amendment, the other place is insisting that decisions on exemption from the right to buy should be taken away from the Secretary of State and put in the hands of local authorities.
The Government, recognising the strength of feeling in another place, have reconsidered this matter, but I have to say that we remain absolutely convinced that decisions should rest with the Secretary of State. We are, however, at a very late stage in the Session and there are many important provisions in the Bill, some of which are eagerly awaited by many thousands of tenants who want to buy their own homes. Deadlock now would result in serious delays in the implementation of those provisions.
Against that background, we have reluctantly decided, in the interests of ensuring that the Bill is enacted quickly, not to insist that the Commons amendment be reinstated.

Mr. Bill Michie: The Government have lost.

Mr. Patten: I shall make the Government's stance absolutely clear. We are determined that as many tenants as possible should have the right to buy. It is tenants who have lost from the amendment. We are determined that tenants should be able to exercise their rights, and that


includes elderly tenants. We have accepted from the start that there should be some limited exclusions but—I choose my words carefully—the Government are not prepared to see elderly tenants denied the right to buy simply on grounds of age. That would be wrong, but I fear that, whatever its good intentions, it will be the effect of the Lords amendment.
The Lords amendment puts decisions in the hands of local authorities. Some will do their best to administer the test fairly. I recognise that, and they will be councils under all forms of political control, but there will be others who will not administer it fairly. They will use their discretion unscrupulously to exclude elderly tenants generally from the right to buy. That is the opinion not just of myself but of the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who acknowledged it in last Monday's debate when he said:
I also accept what the Minister said, in a round about way, about some local authorities being unreasonable. I do not deny that. Some local authorities, given wide discretion, would be wholly unreasonable. There is no doubt in my mind about that. "—[Official Report, 3 November 1986; Vol. 103, c. 704.]
So concluded the hon. Member.

Mr. Jeff Rooker: Read the next sentence.

Mr. Patten: The hon. Gentleman will have an opportunity to put on the record that which he wants to put on the record if he catches your eye, Mr. Speaker. The Government cannot accept the circumstances that I have described. [Interruption.] I feel that we have the intelligentsia with us on the Opposition Front Bench today. We are talking rather than trying to shout people down. Opposition Members should listen because 350,000 elderly tenants could find themselves excluded from the right to buy. That is monstrous and we cannot accept it.
I give the House a firm undertaking that we shall return to this issue as soon as the opportunity arises. We shall seek the earliest opportunity to put decisions back in the hands of the Secretary of State where they belong. In the meantime, my message to elderly tenants is that if they are thinking seriously about buying their homes, they should apply now. Until the new provisions come into force, the Secretary of State's jurisdiction continues and elderly tenants can be sure of a fair hearing from us.

Sir Kenneth Lewis: I have the impression from what my hon. Friend said that the Government might introduce legislation to put right what the other place has changed. How can he be certain, as any amending legislation would have to go to the other place, that that legislation would go through unless our right hon. Friend the Prime Minister was prepared to put some of us in another place? If not, she will still be short of a majority when such legislation goes to the other place in the next Session. I accept that some councils may cause difficulty, which the Government should not tolerate, but will the Government allow a fair period to see how councils behave before taking the action that my hon. Friend is proposing?

Mr. Patten: We shall of course monitor extremely carefully what happens in the coming months once the Bill passes into law. As for my hon. Friend's first point about transmigration to another place, I shall draw his remarks to the attention of my right hon. Friend the Prime Minister.

Mr. Dave Nellist: rose—

Mr. Patten: I do not wish to detain the House. I shall not give way again.
The Government cannot regard this outcome as satisfactory, but our debates have served one useful purpose for Conservative Members. They have clarified the position of the official Opposition and of the alliance parties who in the debates were represented by the hon. Member for Southwark and Bermondsey (Mr. Hughes).
I have already quoted the comments of the hon. Member for Perry Barr. His party is prepared to support an amendment that he acknowledges will result in abuse of tenants' rights. He went on, of course, to suggest that tenants will have redress in the courts. I believe that was the substance of the succeeding sentence. But how many elderly tenants would even contemplate that?
We had an equally revealing contribution from the hon. Member for Southwark and Bermondsey, who on Monday, speaking with the full authority of the alliance, made a formal statement of alliance policy. He said:
we should like increased local discretion over exemptions and discounts."—[Official Report, 3 November 1986; Vol. 103, c. 711.]
According to the hon. Gentleman, that is official alliance policy, and it is an extremely revealing statement. The alliance is in favour not just of local discretion over exemptions from the right to buy—the issue raised by this amendment—but also over rates of discount. The whole notion of tenants' rights is now given a new meaning —rights are what one's local council decides one should have. My hon. Friend the Member for Eastbourne (Mr. Gow) was quite right to describe the hon. Gentleman's statement as a "revelation". Tenants will now know what to expect from the alliance.

Mr. D. N. Campbell-Savours: What about the abolition of the Lords?

Mr. Patten: That is not a matter for me.
It is quite clear that none of the Opposition parties cares about the wish of many elderly tenants to become home owners. Even worse, they seem to care precious little about fairness and consistency in the application of rules. The Government care. We are not prepared to stand by and watch tenants cheated of their rights by bureaucratic arrogance simply on grounds of their age. I repeat the undertaking that I have given. As soon as there is a suitable opportunity, we shall return to this issue. We shall seek to put decisions back in the hands of the Secretary of State, where they belong.

Mr. Rooker: I honestly thought that the Minister would have had a little more grace in accepting the second defeat on this issue suffered by the Government in another place. Frankly, the hon. Gentleman exaggerated the situation out of all proportion.
This is not a general exclusion for elderly people, and he knows it. Elderly people have no fear in general that they will lose the right to buy. A figure of 350,000 has been mentioned, yet in the last two years the only argument has been about 900 applications, out of which 300 exclusions have been granted. That is all that has brought this about. It is therefore a travesty to say that this is a general exclusion. It is not.
The Minister also pleads lack of time. I understand that. On more than one occasion I virtually said that if he got stuck for time, the Opposition would facilitate the Bill


provided that the Government got rid of the clause that removes security of tenure for 5 million council tenants. That offer was never taken up.
4.15 pm
In addition—it may not be his responsibility—between Third Reading in this House on 24 April and Second Reading in the House of Lords on 30 July, nothing whatever was done about the Bill. Therefore, there is no excuse for having left the Commitee and other stages of the Bill until November.
The Minister is right that many people are waiting for the new benefits—leaving aside the argument about security of tenure—that are available in the Bill. Many of them were promoted by the Opposition and redrafted by the Government. Many people and many local authorities will be waiting for the start of a new urban regeneration grant. Therefore, we do not seek to delay the Bill. The Government have chosen to give in to the Lords, even though they did not have to. They could have challenged the other place again, and, although they have chosen not to do so, they have made their decision in a way that is somewhat less than graceful.
As I said on Monday, I am under no illusions, and neither should any other hon. Member be. If local authorities act unreasonably, they should be condemned. The point is that the criteria under which they must act are set out more clearly in the amendment than previously to determine whether a property is particularly suitable for an elderly person. We are talking not about elderly people, but about properties that are particularly suitable for them. The means of deciding whether such properties are particularly suitable is to look at the list of factors in legislation that must be taken into account. If any local authority strays outside those factors, it will be acting unreasonably, and I and any other hon. Member concerned about fairness and justice will condemn it.
It is true that, at the end of the day, our constituents can have recourse to the courts. But, as I said on Monday, so far as I am aware the only reason for the House of Lords insisting on this a second time is that its previous attempts to achieve fairness were seen by the Secretary of State to operate unfairly.
The other place has made it clear that it does not trust the system that has operated hitherto—under which there was no opportunity to go to court on a test of unreasonableness. We gave examples where houses and bungalows designed and modified specifically for elderly people, and which met all the factors, were allowed to be sold even though Parliament decided otherwise. That is the problem, and that must be the reason why the House of Lords has insisted on going the whole way.
The Government have raised a deliberate red herring. There is no general threat to elderly people, even to those living in ground floor accommodation in a tower block. Unless such dwellings meet all the factors in law, elderly people will not be deprived of the right to buy.
The argument in the last two years has revolved around 900 applications and 300 exclusions. It is a travesty to talk about 350,000 dwellings, and it does the Minister no justice whatever.

Mrs. Elaine Kellett-Bowman: I agree with the Minister that alliance policy would indeed be disastrous for elderly people, particularly on Merseyside,

which happens to include Knowsley, North. However, I assure him that my local councils—Lancaster city council and Wyre borough council, which I have the honour of sharing with my hon. Friend the Member for Wyre (Sir W. Clegg)—will administer these tests fairly, as they have always done, and my elderly constituents will not suffer.

Mr. John Cartwright: I ought to point out that the amendment that was carried in the other place did not have narrow political support. Had that been so, it would not have been carried. In our discussion last Monday I pointed out that the original amendment had the support of the Association of Metropolitan Authorities — admittedly Labour-controlled—of the Association of District Councils, which is Conservative-controlled, and of all the professional bodies that are concerned with housing. The reason for that degree of all-party support is contained in the reason that the other place has given to the House of Commons for sticking to its guns.
The Lords reason says that, as the Bill left this House on Monday evening, it failed
to provide adequate safeguards for the stock of local authority rented accommodation specially suitable for people of pensionable age.
It is impossible for this House to dispute that assertion. When the number of elderly people is growing, it is absolutely essential to ensure that an adequate supply of good quality specifically purpose-designed accommodation is provided for them.
I accept the Minister's point that one has to be evenhanded. We have to ensure that there is an adequate supply of rented accommodation. But we must also be as sure as we can that the elderly are not unreasonably deprived of their right to buy. I accept that on occasions it is difficult to achieve the correct balance, but the form of the legislation as it left the other place provides a reasonable compromise. The elderly will not be treated differently.
I accept that the Minister made a fair point when he said that we should not adopt a different attitude towards the elderly. Therefore, elderly council tenants who wish to buy should be treated in the same way as other council tenants who wish to buy. Tenants who wish to buy their homes but who believe that they are being treated unfairly or unreasonably by the local authority have the right to take advice and go to court. I do not think that elderly tenants who wish to buy their homes should be treated differently.
The Minister said that local authorities will abuse their position. Some local authorities may do so. In the light of experience, some local authorities will adopt a political view. However, it is hard for some hon. Members to accept that because certain local authorities dislike the right to buy they will act unpleasantly, unreasonably and unjustly for political motives.
We have been told that Ministers who are passionately in favour of the right to buy will act absolutely independently, impartially and justly, without any other motive than the reality and the justice of the case. But Ministers are politicians, too. They are motivated by political concerns. Because of what has happened in the past—the large number of sales and the way in which detailed issues have been dragged into the argument—we are entitled to be suspicious of the suggestion that Ministers are completely impartial and just.
My last point touches on what was said by the hon. Member for Birmingham, Perry Barr (Mr. Rooker). The Minister seemed to be determined to make the worst of a bad situation. He ought to have been more gracious. The gap between us is not nearly so large as he tried to make out in his extremely political and antagonistic speech. He seems to have been told, "If you're going to go down, you'd better go down with all guns firing." The issue is not so important as to lead him to change his normal attitude towards these issues.

Mr. Gwilym Jones: The hon. Gentleman has referred to the gap between the two sides of the House on this issue. We have heard the point of view of the Social Democratic party. Will the hon. Gentleman be asking his Liberal colleague to put the point of view of his party?

Mr. Cartwright: The position of the two parties on housing for the elderly is exactly the same as the position of all those who serve on the organisations to which I referred, including members of the hon. Gentleman's own party who are represented on the Association of District Councils, and all the independent experts who are concerned with housing. The hon. Gentleman should not try to drag political red herrings across this point.
To return to the Minister's determination to extract the last bit of party politics that he can out of this issue, I am sorry that after six years of argument we have not achieved stability. We could have achieved stability on the basis of what was clone by the other place, but we have been told that we shall face more uncertainty. At an unspecified future date, the Government intend to legislate again. Instead, therefore, of providing stability for the elderly, the Government have introduced a further threat. It is strange that, on an issue as sensitive as this, a Government of this complexion should be saying that the man in Whitehall knows best.

Mr. Robin Squire: It is rare that I should be congratulating the same Minister twice within the space of 48 hours. I hope that the Treasury Whip will note that. Having congratulated the Minister on Monday night for accepting an amendment that redefined homelessness, for reasons which the House accepted and which I do not intend to go into now, the Government's judgment in this respect also is absolutely sound. I expect that all right hon. and hon. Members have received letters from constituents who are anxious to benefit from one or other of the Bill's provisions. It would be wrong, therefore, to jeopardise even slightly the possibility of that legislation passing into law.
I admire my hon. Friend the Minister greatly, but I think that, although I heard what he said about the activities of a number of local authorities, he should look carefully at the way in which the legislation is used by local authorities. He should not prejudge what will happen. He may find that very few authorities are as mendacious as he may fear, in his heart of hearts, they may be, when confronted with this legislation. If very few authorities go against the spirit of the new Act, the House will not want further legislation on this issue. It will be left to my hon. Friend and the Government, as always, to introduce further legislation, should this turn out to be bad law, leading to abuse. Therefore, I ask my hon. Friend to keep an open mind.

Mr. David Winnick: It is interesting that the hon. Member for Hornchurch (Mr. Squire), who takes a deep interest in housing matters, should have adopted a different line from a number of other Conservative Members. I assume that it is very different from the line that is taken by the hon. Member for Eastbourne (Mr. Gow) who will no doubt be trying to catch your eye, Mr. Deputy Speaker.
As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said, the truth is that the Government have surrendered without any grace. In all the circumstances, the other place acted wisely and I have no regrets about the decision that it reached. It will be ironic if the more Right-wing Tories here urge their party to enter the next election with a platform of abolishing the House of Lords. It would be a new twist in British politics, one that we shall watch with considerable interest.
It was interesting to note that the Minister referred almost with contempt to local government and local democracy. He seems to have no confidence in local authorities, even perhaps Conservative-controlled local authorities, in this particular matter. It has already been said that if anybody thinks that a local authority has acted wrongly he can go to court. The ultimate judge, therefore, will not be the local authority. That should be clearly understood.
Many of the elderly constituents understandably want to live in bungalow-type accommodation, especially if it is adapted for use by the elderly. Due, in the main, to the Government's policy, no contracts for local authority housing of any kind in the borough of Walsall have been entered into since 1979. That means of course an ever lengthening housing queue. If local authorities such as mine had been able to build the type of accommodation which we are discussing, I might have adopted a different attitude to this Lords amendment to which the Government have agreed.
What is important is not whether this type of accommodation should be sold to the sitting tenant, but that local authorities should be able to carry out their housing responsibilites as they did before 1979. Why should they not be able to build much more of this bungalow-type accommodation which is so urgently necessary and many other forms of accommodation, in view of lengthening waiting lists, the position on bed and breakfast accommodation and the scandal of homelessness? The Government have no authority to start lecturing local authorities. Local authorities are asking for the financial means and HIP allocations to carry out their housing responsibilities properly.
I welcome the amendment. It will help in a small way to protect some such accommodation from being sold and, because of Government policy which prevents local authorities from building, I have no regrets about that.

Mr. Ian Gow: This debate takes place because of what occurred in another place at 23 minutes past 4 o'clock yesterday. There are nearly 1,200 Members of the other place. Yesterday by 148 votes to 124 the other place—[Interruption.] I am recounting the plain truth. It is characteristic of Opposition Members to quarrel with the truth, but I shall recount it. We are having this debate because of the decision in another place.
My hon. Friend the Minister advised the House that we should accept the view of another place and the issue


which the House must decide is whether or not to accept that advice. You will have studied carefully, Mr. Deputy Speaker, as I have done, the list of those who voted against the Government's advice in another place yesterday afternoon. There was a quarter of bishops—the Bishops of Carlisle, Ely, Rochester and Southwark—and the new recruit to the Social Democratic party, the Duke of Devonshire. They were joined by the former Prime Minister, beloved of Opposition Members, Lord Wilson of Rievaulx.
The view taken by another place was that it is wiser and safer for elderly people who wish to buy the homes in which they live to put their trust in local authorities, including Labour-controlled local authorities, than in my right hon. Friend the Secretary of State and my hon. Friend the Minister. That is the essential difference between the view taken by another place and the view taken by this House on Monday.

Mr. Dobson: Will the hon. Gentleman give way?

Mr. Gow: No, I shall not give way. I do not wish to make too long a speech or to be led astray by the hon. Gentleman.
Do we believe that the test whether a house or flat is particularly suitable as accommodation for an elderly person will be applied more fairly, impartially and reasonably by the Secretary of State or by certain Labour-controlled district and borough councils?

Mr. Rooker: What about judges?

Mr. Gow: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) says, "What about judges?" He is right that it will be open to an aggrieved tenant to go to court if he seeks to exercise the right to buy but is turned down by his district council on the grounds that the house or flat is especially suitable as accommodation for elderly people. But going to court is a costly and protracted business. It is simply not good enough to say to a tenant and prospective purchaser in that situation, "If you have a capricious, unreasonable, unfair local authority, all you need do is to go to the county court."
As I said in the debate on Monday, when all Secretaries of State and Ministers for Housing have been asked to determine whether a house or a flat falls within the criterion laid down by Parliament, they have taken that decision immensely seriously and have applied their minds conscientiously and fairly to that decision.

Mr. Dobson: Will the hon. Gentleman give way?

Mr. Gow: I said earlier that I would not give way.
The amendment that has been insisted on by another place will injure the prospects of fair treatment for elderly people who wish to buy their homes. My hon. Friend the Minister gave his advice to the House with great reluctance and I shall follow his advice with even greater reluctance. The other place is not nearly as closely in touch with the real world and with how matters operate in our constituencies. The other place, out of touch as I believe it to have been on this issue, with four right reverend prelates voting against —[HON. MEMBERS: "Divide the House."] I wish that hon. Gentlemen would listen instead of shouting.
Another place has failed to understand the world as it is. The four right reverend prelates and the noble Duke

have not had direct experience, as some of us in this place and on this side of the House have had, of the wishes of elderly people, who should not be penalised simply because they are elderly. Nor have they understood the reality of the deep hostility of some Labour-controlled councils to the concept of the right to buy.
I welcome the assurance by my hon. Friend the Minister that at the first suitable legislative opportunity we shall seek to correct the error made by another place. With even greater reluctance than my hon. Friend, I shall acquiesce in the decision of another place.

Mr. Simon Hughes: We have listened to two of the most ungracious speeches from the present and former Ministers for Housing, Urban Affairs and Construction that can have been heard in either House since the legislation was introduced. It comes ill from the hon. Member for Eastbourne (Mr. Gow), in the same speech, to complain first that there is a House of Lords making decisions when his party, above all, wants to continue it in its present form, and then that the House of Lords decides that it has more trust in the courts than in the Secretary of State. If the hon. Gentleman is willing to sustain the argument that the courts cannot be trusted, that is certainly a novel development in the Tory party.

Mr. Gow: Will the hon. Gentleman give way?

Mr. Hughes: I will not give way.

Mr. Gow: rose—

Mrs. Kellett-Bowman: Will the hon. Gentleman give way?

Mr. Hughes: I will not give way. The hon. Lady has not given way to me on previous occasions.
This matter has come before Parliament as legislation on three occasions. In 1980, when the Government wished to apply similar right-to-buy rules to old people's dwellings as applied elsewhere, their Lordships passed an amendment which then came back to the Commons, and to which the Government proposed a variation that was then passed by this House. That new wording was returned to another place and their Lordships accepted it. Since then, my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), my hon. Friends the Members for Liverpool, Mossley Hill (Mr. Alton), for Berwick-upon-Tweed (Mr. Beith) and for Truro (Mr. Penhaligon), and, in another place, the noble Lord Wigoder, have argued that dwellings for old people should be examined with special care because of the relative shortage of such accommodation.
In 1984, in the Housing and Building Control Act, the Government again attempted to introduce the right to buy for that category of old people. The other place disagreed and passed an amendment which came back to the Commons and was overruled. On that occasion, my noble Friends Lord Evans and Baroness Stedman were part of the group in another place who insisted that they were right, and the Government were defeated by one vote. The Government then proposed a variation that was more accommodating to the views of another place, and it was eventually accepted.
The views and arguments of another place have not become any less strong since then. As my hon. Friend the Member for Woolwich (Mr. Cartwright) said, their Lordships made it clear that they rejected the Government's view because the Commons amendment


failed to provide adequate safeguards for the stock of local authority rented accommodation specially suitable for people of pensionable age. Yesterday was the second occasion on which the issue was debated in another place. This time their Lordships insisted not by a majority of one but, with members of the Labour party, both alliance parties, the Conservative party and the Bishops' Bench — including my local bishop, the Lord Bishop of Southwark—by a majority of 24 that such accommodation needed to be protected.
The reason for such protection is simple. If there was anxiety in 1980 and 1984 about the stock for old people being depleted, there is more anxiety now as there is less stock, more old people and the constraints under which local authorities work are considerably greater.

Mr. Dobson: Does the hon. Gentleman agree that in coming to the conclusion that they would rather leave discretion with local authorities than with the Secretary of State their Lordships may have borne in mind the fact that the current Secretary of State for Environment, in his previous incarnation as Secretary of State for Transport, was more than once ruled by the courts of this land to have acted irrationally, unreasonably and unlawfully?

Mr. Hughes: The hon. Gentleman, a fellow London Member, is right. He, I and other hon. Members remember well that many of those matters related to the London Regional Transport Act 1984. There was great controversy over that because the Government originally insisted that there would be no concessionary passes for pensioners, but eventually they were forced to give in.
The arguments put in another place were overwhelming. I sincerely hope that the Government do as the hon. Member for Hornchurch (Mr. Squire) suggested and are slightly more graceful and attentive to the arguments, the facts and the realities. I hope that they realise that if they are going to criticise the other place on anything, to criticise their Lordships on something that applies specifically to old people is perhaps inappropriate as, given their average age, their Lordships probably know more about the problems of old age than we do.
Their Lordships were very clear and the Government have, at the end of the day, accepted their decision. It would have been better if the Government had done their research and accepted the overwhelming arguments to protect the interests of old people in the first place. It cannot enhance the Government's prospects of recruiting millions of elderly people to their side when they are so ungracious in eventually accepting that old people's dwellings need special protection.

Mr. Robert B. Jones: I quite understand that my hon. Friend the Minister has come to this decision with a pistol at his head. Like my hon. Friends, I fully understand his genuine concern for the feelings of those who would be deprived of the benefits of the Bill if, because of a ping-pong match over this clause, it failed to become law.
However, I welcome what my hon. Friend said today about the possibility of bringing further legislation forward. Together with many of my hon. Friends, I believe that there will be plenty of examples of Socialist authorities looking for every chance to cheat old people out of the opportunity of buying their homes.
It is all very well for my hon. Friend the Member for Hornchurch (Mr. Squire) to say that if only one or two

authorities indulged in such behaviour it should not be necessary to bring legislation forward, but I take the opposite view. If the Conservative party is the party of one nation, the old people in Haringey and Brent deserve the same opportunity to buy their homes as the old people in Conservative-controlled local authorities.
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There are two arguments against the decision of the other place. The first relates to the question of unreasonableness. The example from Socialist authorities of direct labour organisations shows us the direction in which those authorities would go. The convenor of the Association of Direct Labour Organisations —Councillor Senior of Sheffield—said that they are trying to obstruct the law in every way that they can. That is what Socialist authorities are about. I would not put my faith in the reasonableness of Labour or alliance-controlled authorities.
The second major argument against their Lordships' position relates to the remedy. I do not suggest that the courts would be anything but impartial in their interpretation of the law. However, the point is not that they would be impartial, but that people would have to go to the courts in the first place. That would be a lengthy and expensive process. That fact would be used by Socialist authorities to intimidate and deter old people from taking advantage of the right to buy. Not only would those whom their Lordships intended should have that right be unable to buy their own houses, but many others would not attempt to do so through failure to understand where the line was drawn.
I am not surprised that the other place voted as it did. After all, the Peers concerned are all members of the landlord classes. My hon. Friend the Member for Eastbourne (Mr. Gow) reeled off a list of distinguished prelates, and we all know the faults of the Church Commissioners as landlords. He drew our attention to a noble Duke. Of course, the biggest racketeering landlords of all are the Socialist authorities, which have failed to provide service to their tenants and at the same time have sought every opportunity to deprive them of the one thing to which they have looked forward — an end to their serfdom by buying their council houses.
This is a black day for the old people who are tenants of local authorities. I look forward to a brighter day in the near future when my hon. Friend the Minister will bring forward fresh legislation that will enable us to fulfil old people's aspirations as we set out to do in the 1979 manifesto and the 1983 manifesto, and no doubt will in the next manifesto.

Mr. Tony Marlow: I apologise for having missed the earlier part of the debate, but I was elsewhere in the House.
This is a very black day for the constitution. The other place is ill-advised in its action. We have heard the merits of the issue which has been debated. It is the prerogative of the other place to send issues back to this House for reconsideration. I do not believe that it is the other place's prerogative — it is not democratically elected and I cannot foresee a way in which it could be—and nor is it right or proper for it to interfere with the rights of this elected Chamber to introduce proper legislation on the basis of a majority won in a general election.
Opposition Members might well take account of this issue in case they ever form the Government again, though


I doubt that they will. The Opposition should take account of what their Lordships have done on this issue and think what such action might do to some of their pet programmes that they wish to foist upon the nation. This is a black day, but every black day and every cloud has a silver lining. The silver lining is, I believe, that it will give yet more power to my hon. Friend's elbow to bring before the House next Session a further housing Bill. Such a Bill is vital and relevant and I look forward to it.

Mr. Rooker: By leave of the House, I should like to make two important points. Because of the extremely unfair and partisan way in which Conservative Members have approached the issue, they seem completely unaware that all over Britain dozens of Conservative-controlled district councils have expressed extreme unease about the way that the Government have operated the rules. Those councils have complained about the loss of housing stock that is especially suitable for the elderly. They are not talking just about general housing for the elderly, and it is not an issue that affects only Labour-controlled local authorities. It affects Conservative-controlled authorities as well, and Government Members would do well to take that on board.
My second point is that every other aspect of the right-to-buy legislation protects every citizen through recourse to the courts. That applies to everything save this one issue. Conservative Members should not say that the concept of going to the courts is rubbish because that remedy is available to most citizens, at any rate for all the rights protected by statute. What is so special about this one narrow issue that it has to be decided by ministerial prerogative? That case has been found wanting in the past.
We shall take on board the castigations delivered by the other place. I was careful in what I said on Monday about the other place because I did not want to upset the noble Lords. I and my hon. Friends share the view that because the noble Lords are not elected the other place is undemocratic. However, it is part of our constitution within which the Labour party seeks to work.

Question put and agreed to.

Resolved,
That this House doth not insist on its disagreement to the Lords amendment.

National Health Service (Amendment) Bill

Lords amendments considered.

New Clause

HEALTH AND SAFETY LEGISLATION

Lords amendment: No. 1, after clause 1, insert the following new clause—
. — (1) For the purposes of health and safety legislation—

(a) a health authority shall not be regarded as the servant or agent of the Crown, or as enjoying any status, immunity or privilege of the Crown; and
(b) premises used by a health authority shall not be regarded as property of or property held on behalf of the Crown.

(2) In this section—
health authority"—

(a) as respects England and Wales, has the meaning assigned to it by section 128 of the 1977 Act; and
(b) as respects Scotland, means a Health Board constituted under section 2 of the 1978 Act, the Common Services Agency constituted under section 10 of that Act or a State Hospital Management Committee constituted under section 91 of the Mental Health (Scotland) Act 1984; and

the health and safety legislation" means—

(a) the Health and Safety at Work etc Act 1974 and the regulations, orders and other instruments in force under it; and
(b) the enactments specified in the third column of Schedule 1 to that Act and the regulations, orders and other instruments in force under those enactments.

(3) Section 125 of the 1977 Act and section 101 of the 1978 Act shall have no effect in relation to any action, liability, claim or demand arising out of the health and safety legislation.
(4) This section shall have no effect in relation to anything done or omitted before its commencement.

The Minister for Health (Mr. Tony Newton): I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Ernest Armstrong): With this it will be convenient to consider Lords amendment Nos. 5 and 7. I should inform the House that these amendments involve privilege.

Mr. Newton: In line with your indication, Mr. Deputy Speaker, of what is acceptable, I should like to speak to amendments Nos. 5 and 7. In doing so I hope to restore that happy sense of harmony and unanimity in the House in response to our dealings with another place. Those dealings were rudely sullied by those hon. Members who spoke on the Housing and Planning Bill. In this case I hope that there will be agreement between both sides of the House about what I am recommending — the warm acceptance of a number of amendments made in another place to some aspects of the Bill.
Amendment No. 1 is a new clause inserted in another place together with some tidying up amendments that were inserted by the Government towards the end of proceedings in another place. The amendment seeks to remove from health authorities Crown immunity in respect of health and safety legislation, in the same way as clause 1 of the original Bill removed it in respect of food legislation.
In its new form, it defines the health authorities affected and the legislation, but it does not contain regulation-making powers originally envisaged in the amendment moved in another place. That is simply because it turned out to be unnecessary to have such powers, as they are already available in the Health and Safety at Work etc Act 1974. The application of the clause in its broader form is limited to events occurring after its commencement and applies in the same way as clause 1 of the original Bill about food legislation.
We have taken a further significant step in the legislation about Crown immunity affecting health authorities. We have gone significantly beyond the original proposal which, as the House will recall, arose in the aftermath of the Stanley Royd hospital inquiry into the outbreak of food poisoning. We have gone significantly beyond the Government's decision at that time to remove Crown immunity from food legislation, and we accept the argument put forward in the other place that that removal should also apply to health and safety at work legislation.
It might have been more difficult to say that at a much earlier stage, but now it seems to be an entirely sensible move and I welcome it. It represents a concordat not just between this House and another place, but also between the Government and those Opposition Members who expressed anxiety about the position. It is a useful piece of further progress and I hope that it will receive enthusiastic or at least warm-hearted support from hon. Members on both sides of the House.
The other two amendments are technical. Amendment No. 5 provides for clause 1 in the food legislation and Lords amendment No. 1 in the health and safety legislation to commence operation three months after the date on which the Act is passed. That short delay is necessary to allow health authorities to be advised of the changes in the law and in working procedures and to enable them to undertake any necessary training. As will be readily apparent to hon. Members who have looked at amendment No. 7, it simply extends the long title of the Bill to reflect the insertion of the new clause on the wider removal of Crown immunity. It provides cover within the long title of the Bill for Lords amendment No. 1.

Mr. Frank Dobson: This is a bad day for cockroaches, because it sees the extension of the health and safety legislation to all hospitals and properties of health authorities. This bad day for cockroaches comes about because the Government were outvoted in the other place. We are being asked to agree with the Lords in the said amendment. The Opposition certainly agree with the Lords because we earlier moved amendments on the same lines. We suggested them on Second Reading and moved amendments in Committee and on Report, but the Government used the Whips to vote them down. I suspect that we are happier supporting the amendment than are Ministers—or perhaps I should say happier than their predecessors would have been had they remained in office long enough to carry out the duties being undertaken by the present Ministers.
It must be re-emphasised that hospitals are supremely dangerous places. They are full of germs and viruses, dangerous drugs and dangerous waste. Patients are especially susceptible to infection because they are ill and in need of special protection. The people who work in hospitals and people visiting patients need similar protection. Until the Lords exercised its force majeure, the

Government did not intend to do anything to help. They intended to keep Crown immunity for health and safety offences and they lifted it only from kitchens. That was a daft compromise because the well-informed cockroach faced with the Government proposal could simply move from the kitchen to the operating theatre in order to be in a safer environment.
Crown immunity has never been advocated in order that there should be more prosecutions. Nobody is enthusiastic about lawyers making money out of this proposition. Personally, I am not enthusiastic about lawyers making money out of anything. But the object of the exercise is that the threat of prosecution should force health authorities to take their obligations more seriously. The Association of Environmental Health Officers sent the DHSS a report on 1,000 hospital kitchens that had been inspected. Apparently, 60 per cent. of them, more than 600, had been in breach of regulations, and 97 of them would have been prosecuted if that power had been in the hands of the proper authorities.
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But we are now going beyond kitchen hygiene, to applying the full rigours of the law on health and safety. The Government were very complacent in claiming that the law was operating even though prosecutions were not possible. Lord Young sent a letter to Mr. David Basnett, then general secretary of the General, Municipal, Boilermakers and Allied Trades Union, on 27 November 1985, which said:
The Commission tell me that the Health and Safety Executive have looked carefully into the eight cases which you put forward relating to the operation of the Health and Safety at Work Act 1974. In three of these cases, the Executive were unable to substantiate your evidence. Two of these involved alleged exposure to asbestos. They did confirm however that in four of the five cases the Health and Safety Executive would have prosecuted under the Act were it not for Crown immunity.
That suggests that when that union sent a list of eight cases, 50 per cent. of even that small number would have resulted in prosecutions if that possibility had existed.
I do not want to detain the House, but certain points now need to be put to Ministers, as we are for the first time facing the extension of health and safety legislation. The extension of the power to prosecute and the necessary response from health authorities will cost a lot of money. It was estimated that it would cost £600,000 to do up the kitchens at the Stanley Royd hospital to a proper standard. The health authority across the river estimates that it would cost no less than £1·5 million to do up the kitchens at St. Thomas's hospital. But these figures refer merely to applying the food hygiene legislation. In the time available, we have not had an opportunity to obtain estimates on how much it will cost health authorities to meet the health and safety legislation. But it is clear that it will cost tens of millions of pounds, in addition to the £100 million or so for extending the food hygiene legislation.
Before deciding whether to support the amendment, we need to know whether the Government have estimated the costs that will arise from it. If so, what additional funds do the Government propose to provide to health authorities so that they can protect themselves from prosecution? It is no good any Minister, new or old, saying that such a sum will be allowed for in next year's Estimates, so that hon. Members will not be able to indentify it. Similarly, Ministers cannot say that it is all


right, because that spending has already been allowed for in this year's allocation. This legislation has only just come from the other place, but it will be implemented in this financial year.

The Parliamentary Under-Secretary of State for Health and Social Security (Mrs. Edwina Currie): We are, of course, looking at clause 2, which refers not so much to kitchens as to other Health Service premises such as laboratories. Is the hon. Gentleman aware of the large sums spent by many health authorities in the 1970s as a result of the Howie report on laboratory conditions? The health authority that I served on was obliged to spend a lot of money on bringing laboratories up to very high standards.

Mr. Dobson: Perhaps some health authority laboratories are of a high standard, but not long ago I was told by the consultant in charge of the laboratories at Worcester royal infirmary that the place was full of dangerous pathogens which were a threat to the staff, and that they broke practically every health and safety regulation in the land. Indeed, he subsequently resigned because he was so perturbed about it. Hospitals consist of much more than laboratories, and there are many places within hospitals that have come nowhere near meeting the requirements of the health and safety legislation.
If the amendment is accepted, the legislation will come into operation on 5 or 6 February 1987, which is in this financial year. Health authorities will break the law if they do not put right before then anything that is wrong now. I know that clause 1(8) says
This section shall have no effect in relation to anything done or omitted before its commencement",
but if the law is not being complied with on the day that this part of the Bill comes into operation, the law will be broken. Health authorities will be open to prosecution for anything wrong from that day onwards.
What efforts have Ministers or their predecessors made to ensure that the 97 kitchens that would have been open to prosecution according to the list submitted by the AEHO are brought up to standard? Have Ministers guaranteed those health authorities earmarked funds in order to meet the requirements before 5 or 6 February? If not, can the Minister be joined as a defendant if the health authority is prosecuted? After all, Ministers will have knowingly failed to allocate the sums necessary to ensure that health authorities comply with the law.
Perhaps Ministers are still covered by Crown immunity, even if health authorities are not. If Ministers do not come up with the funds, it may be to their advantage to be covered by Crown immunity, because any sensible health authority would attempt to join them in defending any action. What will the impact be on all those shifty private contractors who moved into the cleaning business? All over the country official reports produced by the health authorities who were forced to bring in those contractors have mentioned substandard cleaning targets and have said that targets have not been met. In one month last year Office Cleaning Services at Addenbrooke's hospital approached only 65 per cent. of the target standard of cleanliness in the operating theatres there. The truth is that standards have declined as privatisation has increased. The reports produced by health authorities provide evidence of that all over the country.
Health authorities that fall foul of the health and safety legislation as a result of contractors being imposed on them by ministerial fiat along with lower standards, because Ministers are not providing the necessary funds, will no doubt wish to join Ministers in defending any action brought against them by the Health and Safety Executive.
I congratulate all those involved in the campaign to remove Crown immunity. Ministers stood out against this sensible proposition, but it is now acknowledged as being eminently sensible by the new Minister. The Health Service trade unions conducted a long campaign. In recent years, the AEHO also played a major part in the campaign as did the Royal College of Nursing and the British Medical Association.
I pay particular tribute to my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) for his constant harassment of Ministers, and anyone else in his sights. Agreement is almost universal that Crown immunity should be lifted in full. We in the House of Commons should have made the decision ourselves. That would have led to a more efficient use of parliamentary time. It should have been accepted when first put forward. We won the arguments but lost the votes. Now it looks as though we shall win the votes as well.
On a sad and serious note: but for the outbreak of salmonella poisoning and the deaths which followed at Stanley Royd hospital, none of these changes would have been proposed by the Government. One of my hon. Friends lost a relative in that outbreak. Nothing can bring back those who died, but many of the people involved will gain some satisfaction from the thought that as a result of what happened measures are, at long last, being taken which should reduce the possibility of another such outbreak.

Mr. Jack Ashley: The Minister for Health made as good a job as possible out of a very weak case. He tried to assert that the Government are in favour of the proposed amendments, although any reading of the debates in another place shows that only a few weeks ago the Government were against the amendments. Ministers spoke out very strongly indeed against them. The Minister tried to put his best face on it. My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) has just made a powerful speech in which he made a number of points that must be answered. I hope that the Minister for Health, or his sidekick, will respond.
For all the diplomacy shown by the Minister—he should go to the Foreign Office — this is the one hundredth crippling and embarrassing defeat for the Government. It is a significant defeat. The amendments are a landmark in the battle to erase Crown immunity from the face of all establishments where it now reigns. The Government's acceptance of the amendments is very reluctant.
Cash must now be found. The Minister's speech must be followed by the provision of abundant money. These are not cheap amendments. They will cost many millions of pounds. We cannot prevent accidents and protect the safety of Health Service workers for nothing.
The campaign began with John Edmonds of the General, Municipal, Boilermakers and Allied Trades Union and the deputation which I took to the Secretary of State for Employment on 18 June 1985. Since then early-day motions and parliamentary questions have been


tabled. The Minister said that the amendments go further than the original proposition. He is not quite right. My hon. Friend the Member for Holborn and St. Pancras has played a leading part in the campaign and will agree that throughout we have always demanded the removal of both food hygiene and health and safety regulations from Crown immunity. We were all disappointed that only kitchens were included at the beginning. That was the thin end of the wedge. We have made it clear that we are seeking wide extension of the removal of Crown immunity. The bodies involved in the campaign include the environmental health officers, the General, Municipal, Boilermakers and Allied Trades Union, the British Medical Association and the Royal College of Nursing. Their efforts laid the basis for success.
5.15 pm
If anyone doubts the need for the change he should check parliamentary answers, which show a 20-fold difference in the incidence of health and safety enforcement notices between Crown and non-Crown premises. That shows the need for the amendments.
It is imperative that the new law be enforced. The quota system for disabled workers is often not enforced. The Minister knows that, as a former Minister responsible for the disabled. We shall fight to ensure that this new law is enforced because if it is not it will be brought into disrepute. We give notice to the Government that when the amendments are accepted and the Bill enacted we shall demand enforcement of the law.
Although the proposed change goes further than the Government originally accepted, it is only the beginning. Much more remains to be done. Even when the Bill is enacted, over 10,000 Government premises will still be protected by Crown immunity from food and hygiene regulations and from health and safety regulations.
We want the removal of Crown immunity to be extended to such places as prisons, defence establishments, Department of Health and Social Security offices and Ministry of Defence kitchens.
A fortnight ago I visited the forces in West Germany and I pay tribute to what the Ministry of Defence is doing, but I want Crown immunity to be removed from Ministry of Defence kitchens. I shall press for that. This anachronism should be swept away.
This is only the second step. The first step was kitchens. The second step is these amendments. We shall press for the new law to be implemented and then we shall press for the law to be extended to all the areas which I have mentioned.

Mr. Archy Kirkwood: I agree with the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) that the amendments are only the first step. I endorse what the Government have done and I warmly welcome the extension of the Health and Safety at Work, etc. Act provisions. I agree with the right hon. Member for Stoke-on-Trent, South that we should now consider some other opportunities to remove Crown immunity. Initially I was not prepared to be as ambitious as the right hon. Gentleman, although I agree with him in principle.
I have looked at reports of the debates in the other place relating to the amendment and the extension of the Health and Safety at Work etc. Act 1974. I was concerned that the health and safety at work provisions covering waste, medical, nursing, dental, veterinary, pharmaceutical and

other practices, as well as human and animal tissue, excretions, drugs, medical and medicinal products, swabs, dressings and similar items, are included and are therefore changed in so far as the amendment affects the Bill.
What worries me is that large areas with a slightly wider extension start to impinge on the provisions of the Control of Pollution Act 1974. Some of the latter overlap the provisions of the Health and Safety at Work etc. Act 1974, Debates in another place on the amendment suggested to me that the noble Lord Ennals, who introduced the amendment, thought in his original drafting that the conclusions of the 11th report of the Royal Commission on environmental pollution, asking for a review of wider issues such as incineration, fencing and other matters relating more directly to pollution, would be covered by the amendment. However, from a strict reading of the amendment and the Bill, I understand that unhappily, that will not happen as a result of the Government's acceptance of the amendment. I ask the Government to look at that and to reconsider the recommendations of the 11th report of the Royal Commission on environmental pollution as soon as possible.
However, I welcome the amendment unreservedly as a step forward. I should also like to underline the comments of the hon. Member for Holborn and St. Pancras (Mr. Dobson). It would be remiss if the House did not cross-examine the Minister a little more about how he and his Department will cope with the undoubtedly increased demands, whether financial or administrative, which have been visited upon them. I accept that they may not have been able to work out the fine detail of the circulars and the guidance that they will give, but the Minister is obliged to give us a little more information about how he proposes to implement the Bill, and what will happen in practice in February next year when the provisions start to bite.
References were made in the other place to newspaper reports that a certain amount of leeway would be allowed to health authorities in that replies could be made within 28 days, and that they would be able to plead poverty as a defence against proceedings or notices that may be raised against them. The Minister should comment on that because it concerns my hon. Friends and me. The costs of implementing the provision may well be substantial but they must be faced.
Another difference between the noble Lord Ennals' proposals and our discussions this afternoon is the inclusion in the noble Lord's amendment affecting regulation powers. Those powers have been deleted in the amendment. The Minister may be able to tell us that perfectly adequate provisions exist under present legislation and that, therefore, the regulation powers are not necessary. I hope that that is the case, and that the Government are not trying in some way to emasculate the Lords amendment.

Mr.Newton: Perhaps I can clear up that point by a brief intervention. The hon. Gentleman may have missed what I said when opening the debate. The powers had been left out, as they were already contained in the National Health Service (Scotland) Act 1978.

Mr. Kirkwood: I am grateful to the Minister. I suspected that that was the case and apologise if I did not catch the Minister's earlier remarks.
The general thrust of the amendment is acceptable to us. It is the first stage in what I hope the Minister will


accept as a continuing march towards a more open and less protectionist environment within which Government Departments operate. I warmly endorse what the Government are doing and they are supported in this by myself and my right hon. and hon. Friends.

Mr. Laurie Pavitt: My right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) commented in passing— I think that all hon. Members will pay tribute to him for his work on this matter—that the Government have come, rather reluctantly, to this position. I can tell my right hon. Friend that there is more joy in heaven over one sinner coming to repentance than over 99 who need no repentance.
My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) made a powerful speech. The amendment is really a long-stop. The points made by my hon. Friends underline the fact that by removing Crown immunity a situation arises where, if things go wrong, a penalty will be incurred. However, things ought not to go wrong. I am pleased that we have at least got this far. It used to be possible for employees to gain severe damages in the courts if their ears had been damaged because of inadequate controls over the level of decibels to which they were subjected. It was not until heavy damages were awarded by a court against a company that there was a tremendous change in the level of decibels allowed under Common Market legislation, and also in the way in which the problem was dealt with in this country.
I rejoice that it is a long-stop. However, the amendment should concentrate the minds of authorities, administrators and, under the Griffiths arrangements, the new general managers a little more upon the important points made regarding the health and safety of people in hospitals.
A case in point is hepatitis B, which was such a disaster in renal dialysis units and which led to deaths of nurses in Edinburgh. Without the provision that we are now discussing, authorities have tightened up, and safety procedures are automatically in place in renal dialysis units. This means that the incidence of hepatitis B has been virtually eliminated. However, the danger is there and the fact that the new amendment will enable the regulations to be tightened up will be of some value.
My hon. Friend the Member for Holborn and St. Pancras referred to the damage caused by privatisation. When the Under-Secretary of State for Health and Social Services inherited the file from her predecessor, she will have seen long correspondence from me about what happened when Crothalls and Pritchards were the cleaners at Westminster hospital. She will also have received the report by the Riverside health authority. I hate to bring personal matters into this, but my wife was the unfortunate person who had to scrub out the lavatory because it was unhygienic. Nothing concentrates a Member of Parliament's mind upon cleanliness more than having to take into a hospital the necessary cleaning equipment to ensure that infection does not set in. Sadly, I have to report that on a second operation my wife got a further infection from precisely the same origin. The nurses and all the staff concerned naturally had sterilised gloves and instruments, but the bath and toilet facilities were rife with infection.
With privatisation monitoring is very loose. Previously a ward sister was in charge of her ward and was the captain of a tight ship. As a result of privatisation, she has to go through a number of procedures in relation to cleanliness, food and laundry before she can obtain satisfaction and the right standards of cleanliness.
Following the acceptance of this excellent additional safeguard, will the Minister look at the mechanisms whereby we can arrive at a position where Crown immunity will not have to be dispensed with because problems will not arise? At the moment, the proverbial coach and horses can be driven through the method of monitoring cleanliness in public places, wards and out-patients' departments. That applies in particular to geriatric hospitals, where the problem of incontinence arises and laundry is put out to outside contractors who do not have the same standards as a hospital hygiene officer.
In the light of this debate, those procedures should be revamped and revised. As a good Labour party member for more years than I care to remember, I never thought that I would thank the good Lord for the House of Lords. However, as in so many cases these days, we are most grateful for what happens in the other place, which enables the Government to concentrate their minds on a reform that has been long overdue.

Mr. William Cash: On Second Reading of the National Health Service (Amendment) Bill, which followed a Bill that had been sponsored by my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) and others, including myself, we were given some dispensation over Crown immunity as a result of the outbreak of food poisoning at the Stanley Royd hospital, Wakefield. On Second Reading, some of us, including myself, suggested that it would be helpful if that immunity were extended to hospital premises and activities other than those purely in respect of food poisoning. It seemed clear that it would be difficult to determine where an outbreak had begun and ended, to make sure that people were properly and consistently protected, and that the Crown could not fall back on what in the event would turn out to be a spurious immunity. We wanted further protection for the patients in a given hospital.
In my constituency of Stafford we had the terrible tragedy of legionnaires disease which caused the death of 37 people. The cause of that has been partially reported on by a public inquiry for which I called and which I was delighted the Government agreed to set up. During the course of that inquiry it became apparent that there was defective machinery and that cooling towers needed to be replaced. They have now been replaced and for that we are extremely grateful to the Minister, the Government and the regional health authority. That has, so far as can be judged, ensured that such a tragedy will not recur in my constituency.
On one occasion I was sitting with members of the press who had gathered for a press conference. Although they did not know it at the time, every person in the room—representatives from virtually every newspaper in Britain — was liable to catch legionnaires disease because at that time nobody knew the cause of the outbreak. Therefore, there was a serious risk to a large number of people.
I welcome the amendment. I appreciate that the scope of the Bill precludes the extension of the abolition of Crown immunity to matters outside NHS hospitals. I apologise to my hon. Friend the Minister for not being here when he opened the debate. I regret that I was caught up in another meeting. However, I feel strongly that these provisions are of great importance. They go a long way to removing, for practical purposes, many of the difficulties that can arise in hospitals. The health and safety legislation is extremely broad. It covers a wide range of activities. As time goes on, it will be discovered that the amendment goes a lot further than many people may have thought in the first instance.
In 1978, the Health and Safety Executive wrote a report on Crown immunity and required the Government to abolish Crown immunity in a wide range of matters. I am sure that my hon. Friend the Minister is well aware of that report. However, we are dealing here with the NHS and the Government have properly gone as far as they can in this legislation. I congratulate Ministers, not only on what the Government have done in respect of this legislation, but on their many achievements since they took office.
I should particularly like to thank my hon. Friend the Under-Secretary for coming to Stafford recently to see the hospital in action in the aftermath of the terrible rail crash tragedy on the outskirts of Stafford. Many people in that hospital expressed deep appreciation for the time and care that she spent, which helped enormously to restore confidence in the hospital in the aftermath of the legionnaires tragedy.

Dr. John Marek: The hon. Gentleman must get the record right. First, it is not the Government who have seen the light. That was forced upon them by the other place. Secondly, the hon. Gentleman might care to explain why he voted against the Bill on Report.

Mr. Cash: The hon. Gentleman is making a fairly cheap point. At that time we had every reason to suppose that we had gone a long way towards achieving the principle of the abolition of Crown immunity in respect of health authority legislation. The reality is that at that time we had got as much out of the Government as we had hoped for. We wanted more. We expected that in due course we would get more, and in private discussions it was suggested that we might well get more. Therefore, it would have been churlish at that point not to have accepted what was on offer.
The hon. Gentleman may be prepared to concede, if he is good enough to look at my speech on Second Reading, that I called for an extension of the abolition of Crown immunity. Furthermore, that was taken up by the House of Lords and the provisions that we are discussing today mirror exactly the provisions for which I called, which were as much as could have been provided for within the scope of the Bill. I have no reason whatever to complain, and it is churlish of the hon. Gentleman to deny the Government credit for accepting the amendment. We are used to reasonable debating points and I do not deny the hon. Gentleman credit for trying to make one, but the trouble is that he is failing.
The real point here is that the Government are already in a dialogue with the other place on the consideration of Lords amendments. I was a member of the Committee which considered 589 amendments to the Financial Services Bill and it is by no means unusual for the Government to be given credit for accepting amendments.

Mr. Maxton: Does the hon. Gentleman seriously believe that if the other place had considered the Bill three months ago, which would have given the Government time to return to the House with the clause that we are now considering and still have time to reject it and return it to the other place before prorogation, it would not have rejected it?

Mr. Cash: My right hon. Friend the Leader of the House has been congratulated on allowing sufficient time to enable the Government to see the wisdom of the amendment. The Government deserve to be congratulated on the way in which they have dealt with this matter.
The problem of viral hepatitis was raised quite properly by the hon. Member for Brent, South (Mr. Pavitt). When the application of the exemptions to health and safety legislation are fully understood, having regard to section 4 of the 1974 Act, it will be appreciated that it is not confined to matters such as viral hepatitis B, which is a serious disease, and embraces the problems of AIDS. The Minister may or may not wish to comment at this stage, but he will know that there is an early-day motion in my name and the names of about 90 other hon. Members of all parties that calls for better provision for education about AIDS through television.

Mr. Deputy Speaker: Order. The Question is whether the House should accept the amendment.

Mr. Cash: Indeed, Mr Deputy Speaker. Where matters were to arise in which AIDS was known to have been transmitted within the context of the health and safety legislation—in other words, there being grounds under the 1974 Act for someone to sue the Crown because AIDS had been contracted—I believe that the Bill's provisions would be of considerable benefit to any potential litigants.

Mr. Dobson: Surely people have always been able to bring civil actions against health authorities, or any part of the NHS, in circumstances which might result in death or illness.

Mr. Cash: I am not disputing that there are circumstances in which a person would be able to set up a claim for damages where AIDS or any other disease had been transmitted through the use of facilities of an NHS hospital. I am saying that the basis on which it could be done is being widened. It is extremely important that the public should know that the Government are dealing with the problem of AIDS, among other things, extremely seriously. I think that I have dealt sufficiently with the issues that I wish to raise, and I wish finally to congratulate Ministers on everything that they have done to ensure that the Bill is enacted.

Mr. Ken Weetch: I shall take only a few minutes of the time of the House. I wish to contribute to the debate because I spoke on Second Reading and I was a member of the Committee which considered the Bill. In Committee I argued the case for the extension of clause 1 into other areas. I was interested to learn how the Government could continue to prop up a system that is logically indefensible, and it seems that they have sought to make virtue out of necessity. When I read the final speech of defence from the Government's spokesman in another place, Baroness Trumpington, I noticed that she fell back on the argument that the voluntary procedures had worked well over the years. Indeed, the Crown notice system has worked well, and from the system's inception


about 330 notices have been issued. In every instance there was ready compliance and none of them had to be referred to the Secretary of State.
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I have no sympathy with anyone who would wish to resist the amendment and I have some sympathy with one or two of the remarks that were made in another place. Since the health and safety at work legislation was placed on the statute book, there has been accumulated a good deal of experience of putting safety legislation into operation in hospitals throughout the country. When I telephoned East Anglia this morning to brief myself on what is happening in the area, I was pleased to learn that the local health authority has become much more safety-conscious in recent years. This is because shop stewards and management have worked hard to identify and pinpoint matters of concern. In so doing they have eradicated many of the problems, and that is an encouraging feature to note. Much hard work has been done thoughout the country.
About 96 per cent. of the speech which I prepared will have to be abandoned, to my relief as well as everyone else's, because of what has transpired. I constructed an elaborate argument which I called Morton's fork. It went something like this: if the situation is serious, the Government will have to do something about it because it is serious; if there has been a good deal of improvement, it will not cost the Government very much to act accordingly, so they can very well take the appropriate action.
I do not think that there will be a rush of litigation. I discern that there is much good will on the part of those who are involved in the problems that we are discussing. Tribute should be paid to trade unions and management for the way that they have co-operated in many areas. I conclude by saying that the Minister's statement at the beginning of the debate should be welcomed in all parts of the House.

Mr. Newton: I am pleased that the debate is coming towards its end in slightly happier terms than when it was introduced by the hon. Member for Holborn and St. Pancras (Mr. Dobson) at the outset. I hesitate to describe the manner of his introductory remarks as his characteristic charm. They contained a degree of abrasiveness which I thought went beyond the tone that I had hoped to set in introducing the debate on behalf of the Government.
The hon. Member for Ipswich (Mr. Weetch) must be one of the most reasonable of hon. Members —I hope that this will not be a killer blow to him—on both sides of the House. I can see from the expression of Labour Members that that is regarded as a fatal charge. In an important respect, the hon. Gentleman has given the answer to some of the rhetoric of a rather routine character with which the hon. Member for Holborn and St. Pancras sought to embellish his speech. He suggested, for example, that the problem is yet another one that can be solved only by the Government finding a large and unspecified sum to be thrown at it.
The Government's view is exactly that which was set out in the concluding remarks of the hon. Member for Ipswich. No one can pretend that everything is perfect —if it were, we would not be bothering to have this

debate — but there is no reason to doubt that most health authorities have responded to the pressures of the Crown notice system and successive waves of guidance and have made substantial progress towards improving the position that obtained a decade ago. If that were not the position, and if I were to respond to the hon. Member for Holborn and St. Pancras in the terms he used, I should be tempted to ask what the previous Labour Government thought they were doing in 1977 when they allowed cockroaches, to take up the hon. Gentleman's phrase, to continue having their field day for another decade without seeking to take the action that is now being urged.

Mr. Dobson: rose—

Mr. Cash: rose—

Mr. Newton: I shall give way first to my hon. Friend the Member for Stafford (Mr. Cash).

Mr. Cash: Does my hon. Friend agree that the report which was produced by the Health and Safety Executive in 1978 came at a time when the then Labour Government could have taken the appropriate action, which they refused to do?

Mr. Newton: My hon. Friend reinforces my argument. Out of courtesy, I should let the hon. Member for Holborn and St. Pancras have his say.

Mr. Dobson: I cannot expect the Minister to plough through the previous debates on this matter but, had he done so, he would have noted that my view is that the Labour Government were wrong in their judgment at the time. They introduced what they regarded as an improvement in the system, which, until this year, the present Government regarded as adequate. Ministers are on record as saying so, despite mounting evidence that it was not satisfactory. That mounting evidence was not available to the last Labour Government, although I think that they misjudged the matter at the time.

Mr. Newton: In view of the entirely generous acknowledgement by the hon. Gentleman of his views of the action of the Labour Government, I do not wish to pursue this point further. We are now back on the track that I hoped we could have stayed on. We all now recognise that in certain important respects, of which the most obvious was food legislation — we have now extended acceptance to health and safety legislation—the previous situation could not be regarded as entirely satisfactory. It is right to have made these moves. They are now represented in the combination of what the Government put into the Bill in the first place and what they have accepted in response to continuing pressure, including that in the other place in the past few days, which I put before the House at the outset in welcoming terms.
There was a reference to repenting sinners in one of the more jocular contributions to the debate. Neither my hon. Friend the Under-Secretary of State for Scotland—the hon. Member for Galloway and Upper Nithsdale (Mr. Lang)—whom I should not wish to call a sinner in any case, nor I can conceivably be described as sinners in this context because we were metaphorically unborn at the time.

Mr. Dobson: The first words of the financial memorandum of the Bill, as originally published in April this year, state:
Clause I had no implications for public expenditure.
The Bill as drafted did not extend the lifting of Crown


immunity to health and safety legislation as a whole. Does the Minister still say that the rigorous application of health and safety legislation and the liability to prosecution will not cost a penny? That is what the Bill states.

Mr. Newton: I am saying no more than was said by the hon. Member for Ipswich in the last speech from the Back Benches.

Mr. Dobson: My hon. Friend did not say that no extra money was needed.

Mr. Newton: The hon. Member for Ipswich specifically referred to health and safety legislation rather than to food legislation. He said that as a result of the activities of trade unions, to which he rightly paid tribute, and the seriousness with which the 1977 changes had been taken by health authorities, substantial progresss had been made in respect of health and safety requirements. It is on that basis that I, too, wish to say that there is no reason to suppose—

Mr. Dobson: My hon. Friend did not say that no extra money was needed.

Mr. Newton: The hon. Member for Ipswich specifically expressed doubt whether large sums of money were needed, on the basis that he thought that significant progress had already been made. In that respect, there is total unanimity between the hon. Member for Ipswich and myself from the neighbouring county of Essex. That is our view of the position.

Mr. Kirkwood: I wonder whether we could put the question the other way around. Supposing an unforeseen problem arises and money is required to comply with the provisions of the new amendment. What view will the Government take? Does the Department expect the local health authority, whatever it may be and in whatever context it finds itself, to find the money from its existing budget?

Mr. Newton: The hon. Gentleman will understand that I am not prepared to be drawn into speculation about hypothetical situations of that kind beyond saying that, in the Government's view, the amount of money spent on the National Health Service ought reasonably be expected to be sufficient to ensure reasonably clean kitchens and reasonably safe working practices. In the first instance, should a problem of that kind occur, we would expect it to be examined by the district health authority — if necessary, in co-operation or discussion with the regional health authority—before it was suggested that the only way in which it could be overcome was by some further substantial sum of public money being found.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) referred to the Control of Pollution Act 1974. He has sought to raise this point in various ways, and I recognise that it might be worthy of consideration in the longer term. He will understand that we have sought in a pragmatic way to meet those problems which had clearly been revealed as carrying a degree of urgency and proper public concern and to respond to continuing discussion in both House about other aspects. None of that rules out further changes in future. Equally, I must say, for the benefit of the hon. Member for Roxburgh and Berwickshire and the right hon. Member for Stoke-on-Trent, South (Mr. Ashley), that it cannot be taken as committing us to further changes in the future, still less to my committing my colleagues in other Departments to a

certain view of parallel problems. I note the point raised by the hon. Member for Roxburgh and Berwickshire. I do not dismiss it out of hand, but it is manifestly not a matter with which we can deal by further legislative change at this stage.
The hon. Member for Brent, South (Mr. Pavitt) urged us to ensure that the mechanisms for avoiding any consequences arising from the removal of Crown immunity in these respects are applied. I agree with him. Indeed, one point that did not emerge during this debate —it lent a slightly artifical flavour to some comments—is that it was clear from the Stanley Royd inquiry that the primary failure was that of hospital management to manage well. Whether we have Crown immunity or no Crown immunity, Crown notice systems or local environmental health officers crawling all over the place, if management is not equipped to manage hospitals properly, whether in respect of catering or cleaning, things will go wrong.
One thing that I hope will unite all hon. Members is the need—we all expect that these proposals will create a little pressure — for good quality management of the provision of these services and the application of proper standards, whatever the law may be. We are seeking to achieve that by a variety of means.

Mr. Ashley: Although the Minister said that he could not commit himself to further legislation, may we take it that he would be favourably disposed to extending the abolition of Crown immunity?

Mr. Newton: The right hon. Gentleman and I have known each other long enough to know the terms in which we conduct these exchanges. I will not attempt further to interpret for him the demeanour I have sought to show at the Dispatch Box. I shall leave him to draw his own conclusions from the way in which I have approached the subject.

Mr. Pavitt: The Minister, when responding to a comment I made, said that the mechanisms should be applied. That is not the point I made. My point was that the present mechanisms are inadequate. I asked him to revise the mechanisms in the light of the new situation that has developed in the past three years. I asked the Minister to look at the mechanisms and at the gap between present monitoring in certain areas in the ward and possible monitoring to ensure that the mechanisms are effective.

Mr. Newton: Essentially, the hon. Gentleman described in different terms what I meant by management. It is a responsibility of management to ensure that proper standards, and in particular those standards required by legislation, are applied. That process sometimes involves monitoring—it can involve various processes—but it is certainly a responsibility and function of management. If management is not operating well, we shall not achieve the objective. I do not think there is anything between the hon. Gentleman and myself on this point.
I regret that my hon. Friend the Member for Stafford was not present when the debate started and that my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) was not able to be here either. Now that they are present, I am able to pay tribute to the part they played in this argument over many months. I express my gratitude to them and to other hon. Members on both sides of the House for the way in which they have welcomed the


proposals in their different ways, even if they have not entirely congratulated the Government on the proposals that we hope will shortly become law.
Question put and agreed to. [Special Entry.]

Clause 2

PHARMACEUTICAL SERVICES

Lords amendment: No. 2, in page 4, line 27, at end insert—
(5) The regulations shall be so framed as to preclude—

(a) a person included in a list published under subsection (2)(a) above; and
(b) an employee of such a person;

from taking part in the decision whether an application such as is mentioned in subsection (2)(c) above should be granted or an appeal against such a decision brought by virtue of subsection (4) above should be allowed.".

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Mr. Newton: I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Speaker: With this it will be convenient to take Lords amendment No. 3.

Mr. Newton: I think that the House is familiar with the background to the amendments in terms of the Government's general propositions on changes in pharmacy contract arrangements and the provisions in the original Bill, The amendments reflect the further consideration of views expressed in another place on the right role for contractor pharmacists, both in family practitioner sub-committees which will make decisions on applications for new NHS pharmacy contracts and in the bodies which will hear any appeals against those decisions. The effect of the amendments is to confine the right to take decisions on new pharmacy contract applications to those members of sub-committees or appeal body members who are not already in possession of, or employees benefiting from, an existing NHS pharmacy contract.
I should say in making clear this change in the decision-making process—the voting position—that we are not intending or suggesting in the amendments any alteration in the size of the sub-committee or the appeal body, which in both cases will remain at six members plus a lay chairman. There will be three non-pharmacist members and three pharmacy members, of whom one should be a non-contractor pharmacist. However, the two contractor pharmacists will now play only an advisory role. They will not vote on applications and, indeed, will be required to withdraw from the proceedings before the sub-committee or the appeal body reaches its decision on the application.
The third of the three pharmacy members, at both levels, who will not be an existing contract holder, will be appointed from a list of nominees provided by the Pharmaceutical Society of Great Britain—as the ethical body for the whole profession—from branches of the profession other than community pharmacy. I must make it clear that the amendments do not preclude that third pharmacist — the non-contractor pharmacist — from having a vote or from taking part in the final decision on applications. As my noble Friend the Under-Secretary of State made clear in the other place, the Government will consider further whether it would be right for this third non-contractor pharmacist to be purely advisory or

whether he or she should be part of the decision-taking membership. We shall make an appropriate provision one way or the other in the regulations to be made under this clause once the Bill is enacted.
I hope that on this rather tangled subject I shall carry the House with me in recognising that the amendments placed in the Bill in the other place by the Government meet a major anxiety expressed not only in the other place but in this place at certain earlier stages of the proceedings to exclude from actual decisions on new applications for contracts those who, whether rightly or wrongly, might be thought to have a vested interest in the outcome. We have concluded in the light of consideration that this is the right course and that the decision-making structure which we now envisage will fairly reflect the interests of local communities in the provision of new NHS pharmacy services and a pharmacy in its wider professional sense. Contractor pharmacists will remain involved to offer advice from their own perspective on local pharmaceutical needs. That advice will no doubt be seen as important and valuable, but contractor pharmacists will not, in the end, be able to take part in the actual decisions that are made once that advice has been given.
I should like to make clear our intentions towards regulations. We intend to clarify the composition of the FPC sub-committees and the appeal bodies which will deal with applications for new pharmacies. In the first place, we intend to exclude dispensing doctors from partipation, for reasons which I think will be obvious. Secondly, we intend to ensure that no more than one of the three non-pharmacy voting member positions can be filled by any single family practitioner committee contractor profession other than pharmacy. In other words, we intend to make sure that no more than one of those places can be filled by, for example, a non-dispensing doctor or a dentist. The aim is to ensure that the interests of the consumer will be still further strengthened and that the withdrawal of the contractor pharmacists' votes will not create a problem of balance between the different contracting professions. We seek a fairly delicate balance, as I suspect any hon. Member who has ever had cause to look into this problem will realise, and we think that we have probably got it about right in these proposals. I would not wish to pretend that I think that that view will be unanimously held by all those concerned with this difficult matter.

Mr. Weetch: If, in the course of time, this elaborate structure which the Minister has built up is found not to work or to work in an unsatisfactory way, will he not hesitate to intervene again, identify the problem and put it right at a later stage?

Mr. Newton: In the light of my experience of this subject in the past two months since I became Minister for Health, I can certainly say that I should hesitate to intervene again, but I say that in a slightly jocular spirit. Of course, if it turned out that these arrangements did not fulfil the objectives set for them or in some way they proved unsatisfactory, I would be prepared, as one who is, I hope, a reasonably sensible and pragmatic man, to look at them again. We believe that, as matters stand, this is a reasonable balance to have struck, which will work in fulfilment of the objectives set.
Our assessment remains that the FPC sub-committees and appeal bodies as now constituted will take responsible and informed decisions which balance the National Health


Service's interest and the taxpayer's interest in restraining NHS pharmacy costs with the need for good local access to services. We certainly would not have accepted further changes that diverted us from those long-term objectives.
As I have said, it is a difficult and delicate balance in view of the differences between some of the contractor professions and the different perspectives of other groups concerned with these issues. We have sought to find a fair and reasonable balance, and I think that we have achieved that. On that basis, I commend the proposals to the House.

Dr. Marek: These proposals were the subject of much concern in Committee. The principal worry was that some members of family practitioner sub-committees might have an interest in deciding who would or would not be able to open a pharmacy in a particular area. Hon. Members on both sides of the Committee shared that concern, as did those in the other place. The then Minister, the right hon. Member for Brentford and Isleworth (Mr. Hayhoe), gave an undertaking to look at the matter again and, following the keen interest shown in the other place, we now have a set of proposals which are vast improvements on the originals.
I am sure that it would he possible to pick holes in the proposals. It is possible that sometimes they will not work as well as they could. I was pleased to hear the Minister's response to my hon. Friend the Member for Ipswich (Mr. Weetch) that if, at some time, the proposals were seen to have faults, he would look at them again and perhaps correct them. Having said that, it is an important principle that people who have an interest in the opening of pharmacies should not make decisions on them. That raises questions about what happens in the other sub-committees of the family practitioner committees. I am sure that I would he ruled out of order if I went into any detail on that, but the principle is that in this sub-committee the people who make the decisions on opening pharmacies must not have an interest in the matter. What does that mean for the other sub-committees of the family practitioner committees? The principle contained in the amendment is right.
The regulations have yet to be considered. I hope that they are phrased so that the original committee will decide the matter conclusively, not in nine cases out of 10, but in perhaps 49 cases out of 50. We do not want the committee to go through all this and decide who may set up a pharmacy and then have a rerun, in many cases, at the appeal stage. The right to appeal should be kept simple. One should he able to appeal only on very few principles —for example, if something has been done wrongly or if the decision which has been taken is one to which a reasonable person could not hold. However, people should not be allowed to appeal if the only reason for doing so is that, on the balance of probabilities, the decision might have gone the other way. That will depend on drafting of the regulations. In another place, the wording was debated. Their Lordships wondered whether the onus should be on the committee to show that the application should not be granted or on the applicant to show that the committee should grant him permission to open a business. I ask the Minister to consider the matter seriously, because I hope that he will agree that unnecessary quangos are not wanted. If they are not wanted, nor are unnecessary appeals. If unnecessary

appeals are not desired, we must get the original committees right so that they reach decisions which are manifestly seen to be fair.
I hope that the decisions and the reasons for them will be made public. I hope that the community health councils will be involved in the decisions and will make representations, because only through an open system can we ensure that the original sub-committee decision will be the right one. We can then tighten the rules on the appeals side.
With that, I cautiously welcome the Lords amendment. It is a big improvement on the previous position and Labour Members will not seek to divide the House on it.

Mr. Weetch: I wish to voice some of my misgivings about the position that still obtains in the Bill. My speech will also give me the chance to question the Minister on matters about which I am still unclear.
I regret the absence of the Adam Smith lobby on the Government Back Benches, because earlier in debate on the Bill they made much thunder about the loss of opportunity for people to enter the pharmaceutical services market and offer them to the public. I expected that, now that the Bill had reached its last gasp in the House, they would be here for a bravura finish, but they have almost entirely fled the field. That is regrettable because there are still some comments to be made in this area, where the Government are doing something pretty serious to the supply of pharmaceutical services.
Under the clause, the supply of pharmaceutical services will be organised according to the principles of regulation as opposed to open entry and unregulated competition. That is a pretty odd approach to be taken by a Government who are dedicated to free enterprise. I do not object to that approach, but it contains, at least at first sight, some philosophical contradictions. The main virtue of the provision is to avoid over-supply and the increase in cost to the taxpayer from the Government having to pay on-cost expenses to too many suppliers. In aggregate, this will increase the unit costs for pharmaceutical supplies throughout the country.
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I accept the Government's approach as sensible, but if people are restricted from entering the pharmaceutical profession to supply services, it is for the Government to ensure that any system of appeal is absolutely watertight.
It is a bad step to allow local opinion to determine the matter as that will be influenced to a great extent by people who stand to lose or gain from the regulation of the supply of the services. The Government's statement that a national appeals system could not be set up because it would be overloaded with bureaucracy and be slow and cumbersome fills me with great dismay. If the Government cannot set up such a system without strangling themselves with red tape, it is a pretty sorry state of affairs.
Out of the blue this week on two large estates in Ipswich —the Chantry estate and the Gainsborough estate—arid not in response to any inadequacy of the present service, because the two established chemists involved are models of good suppliers, it was proposed that two new suppliers set up in business when there is already adequate provision. Why should that be? The new suppliers are entering the market before the curtain comes down when the Bill comes into operation. In Ipswich, at least, someone


is trying to slide under the door at the last minute to offer services so that he will be in position before the Bill affects what he proposes to do.
I have received two letters this week from separate existing suppliers who argue that they will be damaged because they can cope adequately with the existing demand. Therefore, those two estates do not need any more suppliers. The existing suppliers argue, as do the Government on a general principle, that the increasing costs which the taxpayer will incur through supporting the new entrants will not result in an improved service over the status quo. Therefore, it is difficult to understand how new entrants can be justified. Is it true that throughout the country new suppliers are trying to enter the system at the last moment before the die is cast on the legislation? Is that the case? Have there been many examples elsewhere?
If these new entrants succeed in entering the market for new services, although extra supply is not needed, will they be told to go or will they be allowed to remain for ever now that they have slid under the door at the last minute? If they are subsequently told to go, will they be compensated? Have they come in at the last minute to collect the compensation at the eleventh hour?
I wonder whether the Government can give me some guidance on all those points. While the Minister is replying, I shall be taking down a draft reply that I can use for the two chemists who have written to me this week. I will then be able to say that the reply came straight from the horse's mouth. For the moment, I shall content myself with that.

Mr. Kirkwood: I agree with what has been said in this short debate about the changes contained in these amendments. This legislation is implementing an important step. It is a vast improvement on the rather ham-fisted attempts that the Government were trying to foist upon the profession in Scotland about a year ago when they tried to tag some provisions on to the back end of a miscellaneous legal Bill that applied to Scotland. The House of Lords was quite right to sling the whole lot out.
The worry that was expressed in the House of Lords at that time was the fact that that could be construed, to a certain extent, as a restraint on trade. As the hon. Member for Ipswich (Mr. Weetch) has said, we must try to avoid that at all costs. However, we have to balance that against the other needs and requirements of the Health Service. We must be fair—equally we must be seen to be fair—to all parties involved. Although it has taken us a little time, this amendment is a substantial improvement and has every prospect of success.
I am slightly worried about the question of the success or otherwise of the system. Of course, that can be raised when the regulations are brought to the House. However, it is important that the Department should carefully monitor the membership changes that we are making to the committees and the impact that that will have on the system as it works in practice after the Bill has been implemented. I do not know what machinery, if any, exists to do that. I am fresh to this Bill and did not serve at any of the earlier stages. It may be that that point was considered in Committee.
However, I share the anxiety expressed earlier about the machinery that the Government will use to ensure that the appeals procedure is not only working well but is seen to

be working well. Steps must be taken to ensure that the way in which decisions are taken by the individual appeal committees is, by and large, consistent throughout the country. Of course, I understand and accept the problem that was referred to earlier about establishing a national appeal system. However, if we end up with a patchwork quilt of differing standards of decisions that would be a matter of concern. I listened carefully to the Minister when he said that he would not stand back and ignore that. However, how will the Minister know whether the system is operating satisfactorily?
The hon. Member for Ipswich indirectly touched upon the question of what steps are to be taken in the course of the appeal process to notify other interested parties—consumer groups, community health councils and so on— that applications are being considered and that the appeals are being heard. Looking at the provisions on the face of the Bill, I am not clear as to what procedures would be necessary in order to notify the public and interested parties about how this new committee and appeal system is working from day to day so that representations can be made by appropriate people at the appropriate time. It may be that those points can be considered when the regulations come before the House. I accept that. However, if there are views in the Department about those major areas, it would help the House in considering the amendment if the Government could say something about them.
This is an important and significant step and should not be taken lightly. I do not think that the Government are taking it lightly. The appeals procedures put in place by this amendment are a vast improvement and I endorse them on behalf of myself and my right hon. and hon. Friends.

Mrs. Currie: We hope that the change in the amendments before the House will be welcomed on both sides. They present an excellent example of the revising role of the other place and the importance of the careful negotiations that have taken place between the Government and the pharmaceutical societies concerned. I should say that my brother-in-law is a retail pharmacist in north Devon and, although I have no financial interest in the business that he runs so efficiently, it does mean that I appreciate the role of the retail pharmacist, especially in rural areas, and the excellent work that they are able to do.
The clause as amended produces a balance between the two wide possibilities that might be considered, the first being a free-for-all that some members of the other place have advocated. Indeed, the Office of Fair Trading has drawn our attention to the problem that comes from restriction of trade. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) also drew our attention to that. There is a case for saying that there should be a complete free-for-all and that retail pharmacies should be treated like any other retail business, subject perhaps only to planning permission. The fact is that retail pharmacies are not retail businesses like any other. They provide health care and they are, at least in part, funded in order to provide that health care with taxpayers' money through the National Health Service. Therefore, we have an obligation to ensure an adequate provision of health care as far as possible throughout the country and to be guardians of the public purse. The amendments before us and the clause they amend do that adequately. We have taken careful note of the points that have been made.
The amendment is specific on the decision-making process, the system by which we might get appropriate decisions made. One way of doing that would be if the Elephant and Castle was to decide. However, that would fill all of us on both Front Benches and everywhere else with complete horror. We have enough to do with all the decisions that do come to us. Therefore, it is appropriate that the family practitioner committees and the system that has been established for a long time should be the way it is done.
While allowing retail pharmacists to sit on the panel of the FPC sub-committees to decide and discuss appeals, we felt, and it will be agreed if the House accepts these amendments, that they should not be able to vote. The extension of that exclusion to dispensing doctors will redress the balance. In our view, that is natural justice. The people who serve and vote on the committees must be seen to be independent. There must be seen to be no conflict of interest and, as was pointed out in the other place, we must ensure that there is no danger of subsequent court action as a result of any failure to disclose. That is what has happened. Whether another pharmacist on the panel who is not in retailing but is qualified and working in another area, such as in hospitals, might be able to vote is still a matter for discussion and will be dealt with in the regulations.
We share with the hon. Members for Wrexham (Dr. Marek) and for Ipswich (Mr. Weetch) a passionate dislike of red tape and we are determined that in drafting regulations we will take note of what has been said in this House and the other place. We share the determination that the system should be simple, speedy and acceptable to all concerned with the interests of the patients being absolutely paramount.
The hon. Member for Ipswich asked about the appeals system. The matter was also raised by the hon. Member for Roxburgh and Berwickshire. The proposed new arrangements for allocating pharmacy contracts include an appeals system that is in line with the FPCs' functions, which can operate quickly and will include important safeguards against bias, as we have already discussed. But one of the changes that was agreed by the former Minister for Health after debates was that membership of the appeals panel should be drawn from a national list instead of a regional list, and that the national list should be approved by the Secretary of State for Social Services. The changes aim to balance the need for consistency and experience, which is what the hon. Member for Roxburgh and Berwickshire was aiming at, the need for independence in decision making and the need to deal promptly with appeals, bearing in mind local circumstances. We believe that the appeals system satisfies the concerns expressed by Opposition Members.
6.30 pm
The hon. Member for Wrexham wanted to know about regulations governing procedures of FPCs in other professional work. He may not be aware of the regulations laid down in statutory instrument No. 213, governing the membership and procedure of family practitioner committees. It was laid before Parliament on 28 February 1985. I am sure that the hon. Gentleman knows this already, but let me remind him that the statutory instrument says that, subject to the provisions of the regulation,

if a member has any pecuniary interest, direct or indirect, in any matter and is present at a meeting of the Committee at which that matter is under consideration—

(a) he shall at the meeting and as soon as practicable after its commencement disclose the fact that he has such an interest; and
(b) he shall not take part in the consideration or discussion of that matter or vote on any question with respect to it."

Dr. Marek: Of course, I am aware of that, but the amendment seeks to introduce a slightly wider implication, that if one is in the same profession, one should not be making a decision on an application. As I am sure the hon. Lady knows, doctors and all sorts of people on FPCs may not have a pecuniary interest, but they are in the same area, and they are making decisions.

Mrs. Currie: What we are trying to do is tie down the measure as hard as we can for the pharmacy profession, in the light of current interests and discussion on the placement of pharmacists. But the regulations are there. We merely want to ensure that, in the case about which we are concerned, with the amendments before us, we tie them down as hard as possible. We expect those regulations to be adhered to as they are set down.
The hon. Member for Ipswich wanted to know about pharmacists opening up in his area recently to beat the regulations and the law that we are trying to create, and asked about compensation. He was kind enough to call me the horse's mouth. If he wants a considered reply from the horse's mouth, it would help the horse enormously if he were kind enough to provide some details of what has happened in his constituency in the past few days. I should be pleased to see them. I can say in general terms that the arrangements for pharmacists coming in before the new arrangements start were agreed as long ago as May 1985. There has been some increase in the numbers of new pharmacies — indeed, the increase has been steady in recent years, which I think many hon. Members will welcome, following a decline during the 1970s. I am advised that there has been no evidence of large increases to beat the new arrangements. I should be glad to hear if that is not so, or if there is any evidence to the contrary.
With regard to compensation for leaving the contract, I refer the hon. Member for Ipswich to the question tabled by my hon. Friend the Member for Northampton, South (Mr. Morris), which was answered on 25 July this year. My hon. Friend asked what safeguards the Secretary of State
intends to introduce into the new pharmacy contract to prevent a pharmacist who has received compensation from a closure from opening a new pharmacy.
The answer was:
During the debate in Committee on the NHS (Amdt) Bill I agreed to look again at the system of payments to pharmacists who wished to relinquish their NHS contract, or to relocate their business to areas where they could better serve patient needs, to ensure that the system will work as intended and that there are adequate safeguards against abuse.
The proposed system already has a number of important safeguards. It will operate for two years only and small pharmacies only will be eligible; there is no opportunity for someone to open a pharmacy and then quickly close it to obtain a payment".
Those are exactly the circumstances hypothesised by the hon. Member for Ipswich. The answer continues:
Under the new arrangements a new National Health Service contract will be granted only where it is necessary or desirable for patient services, so new pharmacies will be opened only where patient needs dictate … Both the Pharmaceutical Society of Great Britain and the Pharmaceutical Services


Negotiating Committee have been consulted and both have given the assurance that they will be playing an active role to make sure that the system operates as intended."—[Official Report, 25 July 1986; Vol. 102, c. 735–6.]
I hope that that deals adequately with the point made by the hon. Member for Ipswich.

Mr. Weetch: indicated assent.

Mrs. Currie: I see the hon. Gentleman nodding assent. Overall, a great deal of work has gone into the amendments and the clause.

Mr. Kirkwood: I wonder whether the hon. Lady can help me tonight. Perhaps a little more time is necessary. Under the new machinery of the amendment, do the Government have any direct method of finding out quickly that the system is not working if it happens locally in different parts of the country?

Mrs. Currie: I have no doubt that we shall be watching closely what happens. As I mentioned a few moments ago, the two main societies involved, to which retail pharmacists belong, the PSGB and the PSNC, will be co-operating with us actively to ensure that the regulations are followed. In other words, if a problem comes up quickly, we expect to be notified quickly so that we can ensure that the regulations are followed. But I am sure that the amount of work and negotiation that have gone into the clause and the amendments, and the effort that has been made to ensure that the system is fair to the pharmacist, the taxpayer and, most of all, the patient, will produce a better system than the one we have now.
Question put and agreed to.
Lords amendment No. 3 agreed to.

New Clause

CO-OPERATION IN PLANNING OF SERVICES FOR DISABLED PERSONS, THE ELDERLY AND OTHERS

Lords amendment: No. 4, after clause 3, insert the following new clause—
—(1) After section 13 of the 1978 Act there shall be inserted the following sections—

"Co-operation in planning of services for disabled persons, the elderly and others.
13A. — (1) The duty under section 13, in relation to persons to whom this section applies, includes—

(a) joint planning of—

(i) services for those persons; and
(ii) the development of those services, being services which are of common concern to Health Boards and either or both of the authorities mentioned in that section;

(b) such consultation with voluntary organisations providing services similar to those mentioned in paragraph (a) as might be expected to contribute substantially to the joint planning of the services mentioned in that paragraph;
(c) the publication, at such times and in such manner as the bodies who have made joint plans under paragraph (a) consider appropriate, of those joint plans.

(2) This section applies to—

(a) disabled persons within the meaning of the Disabled Persons (Services, Consultation and Representation Act 1986;
(b) persons aged 65 or more; and
(c) such other categories of persons as the Secretary of State may by order specify.

Joint Liaison Committees
13B.—(1) The Secretary of State may, after consultation

with such Health Boards, local authorities, education authorities, associations of such authorities and other organisations and persons as appear to him to be appropriate, by order provide for the formation and as to the functions of committees, to be known as joint liaison committees, to advise Health Boards and local and education authorities on the performance of such of their duties under section 13 as consist of co-operation in the planning and operation of services of common concern to Health Boards and such authorities.
(2) An order under subsection (1) may contain provisions relating to the role of voluntary organisations in joint liaison committee.".
(2) Section 15 of the Disabled Persons (Services, Consultation and Representation) Act 1986 is hereby repealed.".

The Parliamentary Under-Secretary of State for Scotland (Mr. Ian Lang): I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Speaker: With this it will be convenient to take amendment No. 8.

Mr. Lang: This new clause is an important step in the development of joint planning in Scotland. Its introduction follows a commitment given by the Government during the passage of the Disabled Persons (Services, Consultation and Representation) Act 1986. I am glad to see that the hon. Member for Monklands, West (Mr. Clarke) is here, having returned hotfoot from collecting his "Man of the Year" award earlier today.
The new clause achieves two purposes. First, it sets out the duty that the health boards and local authorities have for co-operation in joint planning of services. Secondly, it confers on the Secretary of State for Scotland a new power to enable him, if necessary, to produce regulations for the statutory direction of the process of joint planning.
Amendment No. 8, which amends the long title of the Bill, is necessary so that it can apply to arrangements for joint planning in Scotland. When the new clause was introduced in another place, it was generally welcomed, and I commend it to the House.

Mr. John Maxton: I apologise to the Minister for not speaking in the previous debate. I gather that he had a speech prepared for it, too, which he was obviously longing to make.
I am a little disappointed that it is the hon. Gentleman who is moving the amendment because we in Scotland are disappointed that our Minister responsible for health is now in the other place, and cannot answer questions in the democratically elected House of Parliament, as was the case until the recent reshuffle. It is interesting to note that this amendment was moved in another place by Baroness Trumpington, not by Lord Glenarthur, who is the Minister with responsibility for these matters—I gather luckily, and much to the annoyance of his predecessor, the hon. Member for Argyll and Bute (Mr. MacKay)—because he was at a conference in the Bahamas at the time.
We welcome the new clause. We must congratulate my hon. Friend the Member for Monklands, West (Mr. Clarke) on it, just as we must congratulate him on being one of the 12 men of the year. I am sure that we will find that his work on this subject will be suitably rewarded in the House as well. It was due to his efforts that the English Bill was brought about and it is to the Government's credit that they have brought forward the clause.
Scotland has not done as well as England in regard to joint planning, especially between health boards and local authorities. Successive Governments have been remiss in


that respect. Far too many people in Scotland are institutionalised. I refer especially to the mentally handicapped at hospitals such as Lennoxcastle and the Scottish national hospital at Larbert, who ought to be living in the community. Recent reports have shown that conditions in some of those hospitals make removal of patients from them very necessary. It is only by joint planning such as is proposed that patients can be brought out of those hospitals. It is no use having a commitment to putting patients back into the community if all that we do is put them under the care of a general practitioner who has time only to feed them valium and keep them quiet. They must be given proper support by the combined efforts of the Health Service, health visitors, housing authorities and social services departments. The Bill at least starts us along the road in that direction.
Just last week I spoke at a conference on dementia at Crieff hydro. I was the amateur among the experts, but it is clear that there will be an 80 per cent. increase in the number of people aged over 85 in Scotland during the next 20 years. If, as is the case now, one in six of those people suffers from dementia, we must work on the principle that they should be kept in the community for as long as possible, but we can do that only if we have joint planning arrangements.
It is essential that we include all relevant organisations, including regional and district authorities. We want social work care provided at regional council level and district council involvement through sheltered housing.
What finance do the Government intend to put in? There is little point in setting up joint committees which will make a lot of plans if, for lack of money, nothing happens locally and patients do not receive the care that they need. The system will not work unless we have extra home helps, lunch clubs and meals on wheels, and more social workers involved with the elderly and the handicapped. There has been a decline in the number of home helps, lunch clubs and the number of people going to them in Scotland during the past six years. There must be resources as well as a commitment to the idea. I hope that the Minister will take some time to deal with that.
I assume that there is some way in which to amend the Bill's financial memorandum. The proposed new clause is not included in the financial memorandum, but nobody can say that it has no financial implications. I assume that the Government will deal with that problem unless, of course, they maintain that there is no financial implication. If that is so, we are passing just a load of verbiage. Although this is the way forward when it comes to looking after the disabled and the elderly, the Government must recognise the financial commitment if it is to mean anything.

Mr. Tom Clarke: I thank the Minister and my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) for their generous comments. I think that it was Harold Macmillan who said at a difficult time for his Government that, in politics, a few kind words go a long way. I feel exactly as he did.
The proposed new clause will be warmly welcomed by many of the people who supported the Disabled Persons (Services, Consultation and Representation) Act 1986. It represents a new principle in Scotland. It also represents a step forward. Many organisations such as the Care in the Community Scottish Working Group, the Scottish Society

for the Mentally Handicapped and the Glasgow Forum on Disability will welcome the principles enshrined in the new clause, although they might not quite consider the details line by line as exactly what they wanted.
I do not, however, want to be churlish. I agree with my hon. Friend the Member for Cathcart that the principle of joint planning has been in operation in England and Wales for more than 10 years. The evidence seems to be that it is working and that a democratic input into decision-taking has been welcomed. It appears to make sense and to lead to efficiency and effectiveness. It must he good for it to apply to Scotland.
There are a few matters on which I should like some clarification. Paragraph 13A(1)(b) speaks of "organisations providing services". Do the Government have in mind advice, the giving of advice, consultation and organisations in Scotland which perform a very useful role? Will they be regarded as providing services in the Scottish context as I understand is the case in England and Wales? Paragraph 13A(1)(c) mentions
the publication, at such times and in such manner as the bodies who have made joint plans under paragraph (a) consider appropriate".
Will the Minister take on board the suggestion that there should be an annual report? People involved in the Health Service, social services, mental health care and others might then feel that these matters could be considered at least annually.
Paragraph 13B(1) mentions liaison. Will the Minister confirm that that word refers also to planning so that people who know about the problems which ought to invite joint planning are involved?
My hon. Friend the Member for Cathcart rightly mentioned Lennoxcastle. I should have preferred to say this in the presence of the hon. Member for Argyll and Bute (Mr. MacKay), but it seemed that the Government were throwing money at that problem. There had been a great deal of criticism of Lennoxcastle. The staff were doing an excellent job, but some of the things being done there could not be defended. As a result of a television programme, the Scottish Minister responsible for health announced that much more money would be spent, but there seems to have been very little consideration of the Government's approach to community care. It seems wrong for the House simply to commit itself to the principle of community care when we have the opportunity to phase out a large Victorian hospital that does not fit in with modern attitudes to community care. It seems to me and to many others that the Government are simply throwing money at the problem.
If joint planning took place in Scotland to the extent that it takes place in England and Wales, those involved with these problems on a day-to-day basis would argue that perhaps there is a better way to spend the money. If resources are limited—and we can have a wider debate about that — the Government are gravely mistaken if they simply make them available to the health board without taking account of the views of the voluntary organisations and social works departments that are called upon to advise on finding solutions to these problems. It would be interesting to know precisely what the Secretary of State intends to do about regulations.
Subsection 13B(2) refers to "voluntary organisations". I hope that that genuinely means that the consumer groups that assist with the problems of mental illness, the mentally handicapped and those with learning difficulties will be


involved in the joint planning process. It would be a great pity if organisations such as the Scottish Society for the Mentally Handicapped — which has done a quite outstanding job — and which recognise the need for genuine community care were not involved in the Government's proposals. I am not suggesting that that is the Government's thinking, but it would be helpful to know exactly where they stand.
The parents of profoundly mentally handicapped children, speaking from their experience, have much to say about these matters, as do the organisations that deal with the mentally ill. Many patients themselves are capable of expressing a view. They all want to see progress on joint planning. In an endeavour to be helpful, I hope that the Government, who were slow to accept the principle of joint planning in Scotland, will accept the view of another place and this House that joint planning in Scotland is essential if resources are to be used effectively, if we are to provide the best possible service for patients, if patient care is to mean anything and if community care is to become a reality.
Despite their earlier misgivings — clearly expressed when the Disabled Persons (Services, Consultation and Representation) Act was debated on Second Reading—I hope that the Government will unreservedly commit themselves to the principle of making joint planning work in Scotland.

Mr. Kirkwood: I reinforce what has been said by the hon. Member for Monklands, West (Mr. Clarke) and I associate myself with the remarks made earlier about the part he has played both in this regard and in steering through his Disabled Persons (Services, Consultation and Representation) Act. I understand that a significant award has been bestowed on the hon. Gentleman this very day in that he shares the "Man of the Year" award with 11 others. I do not know which other 11 men could possibly measure up to the hon. Gentleman's qualities.
The amendment is welcome, and I am happy to endorse it. However, it is only a limited reserve power. What circumstances do the Government foresee before implementing it?
It was said earlier that the situation in Scotland is not as far advanced as in England. That is perfectly true. That is my experience, and it is not for want of trying by those who wish to make the system work north of the border. The Government do not seem to be actively promoting the idea of joint planning as energetically as they could, and they certainly have not been providing the finance through the health boards and the joint planning system to make it work properly.
This measure, described by Baroness Trumpington as "a useful sanction", is all very well, but I hope that it is only a token of things to come and that it will presage a change in emphasis by the Government by putting resources into the system north of the border.
The hon. Member for Monklands, West spoke of the lack of publication of joint annual reports. I endorse that. There should be publication of some type of annual report. I do not mean that there should be a vast bureaucracy or expenditure, but regular reports on progress in the implementation of joint plans and details of changes and additions to any existing joint plans would be helpful so that we can chart the progress being made in the different

regions of the country. That is a minimum requirement before we take decisions about whether or not to implement these reserve powers.
Secondly, there should be mandatory guidelines, or better still a code of practice, on the establishment and operation of joint planning and liaison committees. That would also be a minimal requirement to allow the spirit of the amendment to take effect and flourish.
Thirdly, there is concern about the definition of "voluntary organisations". It would be a shame if it were restricted to voluntary groups that contributed financially to the process in Scotland. It should be extended to include consumer and other voluntary groups that act as representatives. That may be possible at a later stage through regulations that are spawned as a result of this primary legislation. At present the definition is fairly vague and I hope that the Government will interpret it widely.
All this entirely depends on resources. I am prepared to give this change a cautious welcome on behalf of my hon. Friends, but the Government should understand that they are hastening slowly in respect of community care and joint financing north of the border. I hope that the amendment will spur them on to greater efforts in the future.

Mr. Lang: By leave of the House, Mr. Deputy Speaker. The House has given a welcome to the new clause. I am grateful for that, even though, in the case of the hon. Member for Glasgow, Cathcart (Mr. Maxton), his welcome was somewhat grudging.
My hon. Friend the Member for Argyll and Bute (Mr. MacKay) very much regrets his inability to be here today. As the hon. Member for Cathcart knows, my hon. Friend is in Brussels where he is engaged upon agricultural matters, for which he also has responsibility. The Government agree that there is a need for joint planning, and I hope that the new clause makes that clear. The Government also agree with the hon. Gentleman on the need for care in the community, another useful point that he raised in the debate.
7 pm
The hon. Member for Cathcart asked about the involvement of regional and district councils. I confirm that both regional and district councils are involved in joint planning in all health board areas. The clause is not, however, about spending but about making statutory provision for the formation and function of joint liaison committees. It is about the planning and the arrangements for these committees rather than about cash considerations. Joint liaison committees already exist in all areas. There should not, therefore, be any appreciable increase in cost.
The hon. Member for Monklands, West (Mr. Clarke) referred to voluntary organisations. I assure him of the Government's commitment to encouraging the very significant contribution that is made by the voluntary organisations to the provision of community care. If he looks at circular NHS/18 of 1985, he will find in paragraph 31 and onwards the Secretary of State's commitment to the provision of community care.
The hon. Gentleman asked about the terms of the provision that might restrict the extent of voluntary organisation involvement. The Government are very much aware of the considerable amount of work that is done by the voluntary sector and recognise the part that it plays in


the joint planning process. Joint liaison committees are encouraged in the existing guidance on joint planning to involve the voluntary organisations. It is important to allow for some selectivity to prevent committees from foundering through sheer weight of numbers. It is desirable that committees should have the opportunity to structure themselves in a way that best reflects local interests so as best to use the expertise of those who are most closely concerned with the issues. The intention of the clause is to provide for that kind of discretion.
The hon. Gentleman also referred to public accountability. Provision is made for the publication of plans. It is important that this should be done and that the plans should be made available to the public. Clearly, however, it would be counter-productive to have detailed discussion on every minor change to the plans. We do not want great bureaucratic arrangements to be established. Instead, we want to recognise the need for public involvement. It is important to get the broad principles right and then to get on with the job. With the implementation of this clause, I hope that the hon. Gentleman feels that the last brick in his edifice falls into place.
Finally, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked what factors the Government might use in deciding whether or not to activate their statutory planning power. We have made it clear, as he recognised in his speech, that this is a reserve power. We would expect to use it only if there were inordinate delay in progress, or if the plans that were produced failed to address the issues that had been put to the joint liaison committees. It is important that the present arrangements should be given a reasonable time within which to produce results. The Scottish Home and Health Department has written to boards to obtain information on progress. Following the passage of the Bill, the intention is to issue guidance to reinforce the Government's commitment to joint planning.
With those comments, I commend the clause to the House.

Question put and agreed to.

Lords amendment No. 5 agreed to. [Special Entry.]

Clause 6

SHORT TITLE, ETC.

Lords amendment: No. 6, in page 8, line 10, at end insert—
(4A) Each of the following provisions of this Act—

(a) section 2 above; and
(b) to the extent that it inserts section 13B of the 1978 Act into that Act, section (Co-operation and advice in relation to disabled persons, the elderly and others) above,

shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint in relation to it.".

Mrs. Currie: I beg to move, That this House doth agree with the Lords in the said amendment.

Dr. Marek: There is a little more to say about this amendment. Unfortunately, no date has been given for its implementation. The Minister can decide when to implement it. He could have said that it is to be implemented within three months. If no financial expenditure is involved, it would have been very nice if the Minister could have said that it would be implemented within three months.
A headline in The Independent caught my eye today. It Says:
Patients 'suffering' in community care scheme.
The first two paragraphs of that article say:
Psychiatric patients are becoming homeless and suicidal through the Government's care in the community programme which is subsidising private residential and nursing homes through benefit payments of £200 million a year, according to the housing charity, Shelter. Shelter says the patients become victims of unscrupulous landlords because both the National Health Service and voluntary bodies do not have the funds to support them after they are discharged from hospital under the programme. It claims one landlord is receiving about £1 million a year through social security benefits.
The article then says:
Shelter says a draft of an Audit Commission report, to be released in December, supports its view that the process is merely subsidising private landlords.
The article says that former patients had been found
living in mixed-sex, multi-occupied rooms, some with dangerous, illegally connected electricity supplies. In one case, CoHSE reported that a confused, sixty-year-old woman who had not eaten for two days had retreated into a tiny room at the top of a dilapidated staircase. Her two electric fires were running from an adaptor which was illegally connected to a Sp slot meter.
This is an important matter. We should not leave it just at that, by being asked to agree this amendment formally and then leaving the Minister either to implement or not to implement these powers. They should be implemented quickly. The speedy implementation of this amendment would benefit the elderly and the mentally ill.
I realise that the Conservative party believes in the rich and that it believes in the poor. It believes in one standard of health service for the rich and in a lower standard of health service for the poor. Therefore, I do not have very much hope that the Government will accede to my request, but I should be grateful for the Minister's comments.

Mr. Newton: My hon. Friend the Under-Secretary of State for Health and Social Security sought to move this amendment formally in the hope of accelerating the business before the House. I am bound to say that I think that the hon. Member for Wrexham (Dr. Marek) has stretched the boundaries of the debate— I would not say beyond order, Mr. Deputy Speaker, but very near to the edges of order.
My hon. Friend the Under-Secretary of State for Scotland made it very clear that the Government's aim is to secure arrangements over joint planning in Scotland through co-operation between health boards, local authorities and other organisations without the need for statutory intervention. However, to affirm the Government's commitment, my hon. Friend has introduced these proposals by which, subject to a commencement order, the Government can provide for the statutory regulation of joint planning, if it has been clearly shown that the present voluntary arrangements have failed.
It follows from that proposition, which I understand underlies that part of the Bill, that one would need to know what the circumstances were before specifying the date for a commencement order. In that sense, the hon. Member for Wrexham is asking for something that Ministers cannot give to him at this stage, because the circumstances under which a commencement order would be used have not arisen.
I make those comments on a matter that might be thought primarily to be for my hon. Friend the Under-Secretary of State for Scotland. It became clear during his


remarks that the hon. Member for Wrexham had that clause in mind. In fact, the commencement order provisions that were moved by my hon. Friend relate to other parts of the Bill as well. I shall happily make some observations about our thinking on the other clauses, but I sense that the House is not particularly interested in hearing a further ministerial speech on the subject.

Question put and agreed to.

Lords amendment No. 7 agreed to. [Special Entry.]

Lords amendment No. 8 agreed to.

Cereals (Co-responsibility Levy)

Mr. John Home Robertson: I beg to move,
That the Cereals Co-responsibility Levy Regulations 1986 (S.I., 1986, No. 1233), dated 14th July 1986, a copy of which was laid before this House on 15th July, be revoked.
For once I am reasonably confident that the House, perhaps even the Parliamentary Secretary, will agree with me. I mention the Parliamentary Secretary because his right hon. Friend the Minister, who is no doubt necessarily absent from this debate, said as recently as last Thursday:
I would much rather not have had the co-responsibility levy."—[Official Report, 30 October 1986; Vol. 103, c. 439.]
Today we are giving the Minister an opportunity to get rid of that levy. I suggest to the Parliamentary Secretary on this his maiden appearance that he has an opportunity to make a clean break with his recent colleagues in the Whips Office and to vote against this ludicrous levy tonight. I shall be extremely surprised if any hon. Member speaks in favour of it. I should, perhaps, declare an interest as I am a cereal producer and must pay the levy.
The one point of general agreement is that something must be done about cereal surpluses. The Intervention Board for Agricultural Produce in the United Kingdom had 4,777,446 tonnes of cereal in store last month and the position might have been considerably worse if Spain had not had to import substantial quantities of grain this year. It has been estimated that there will be 80 million tonnes of cereals in intervention stores in Europe by 1991. Therefore, it is abundantly clear that there is a need for urgent action to curtail the production of cereals and to help farmers to restructure their businesses in ways which will bring production nearer to the likely level of consumption. At the same time we must give proper consideration to the requirements of consumers and the rural economy.
That will be an extremely complicated task and the only effective, fair way of achieving those objectives is based on a quota system. It is absolutely certain that the co-responsibility levy is a completely pointless diversion from the business of controlling cereal surpluses. Apart from anything else, it just will not work.
The co-responsibility levy on milk has no impact on the production of milk. Indeed, instead of solving any of the problems of that industry, it has been yet another irritation for dairy farmers. In the case of cereals, it is worth looking at the Austrian experience. In Austria a co-responsibility levy on cereals was introduced in 1979. It has since been increased year after year up to a swingeing £25 a tonne this year. Yet the production of cereals has continued to increase. Therefore, there is no evidence that this type of levy will act as a disincentive to cereal growers. On the contrary, the marginal levy might act as a spur for marginal increases in production.
The term "co-responsibility" is one of many examples of linguistic pollution to come to us from the European Commission from time to time. It is intended to imply that the levy will pay for the cost of the intervention system and all that goes with it. It will not. The European Community's gross expenditure on cereals in 1986, including intervention and export refunds, will be £2·53 billion while the levy is supposed to yield only £323


million, so the levy will cover only about 12 per cent. of the costs of the cereals regime, and I suspect that that is an optimistic estimate.
This may be the first instance of an attempt to crack a sledgehammer with a nut and on this occasion it is a fairly unpalatable nut. There are no grounds for hoping that the levy will control the production of cereals. It seems unlikely to make any significant contribution to the cost of operating the intervention system.
But that is not the end of the story. The levy is not only useless but positively disruptive. It is riddled with discriminatory anomalies and may well turn out to be so discriminatory that it will be illegal. The Minister knows that the levy is being challenged in the courts by the European Federation of Animal Feed Manufacturers, which includes the United Kingdom Agricultural Supply Trade Association, better known as UKASTA.
It may be worth briefly exploring the way in which the levy is supposed to operate. When a load of barley or wheat is sold from a farm, the merchant who buys it will deduct 337·3p a tonne in levy from the price paid for the grain to the farmer. Incidentally, that ·3p must have been puzzling for many people's accounting systems. I understand that it arises from the conversion from ECUs to pounds sterling. It is merely the first of many complications.
The grain merchant then has various options. He may have to dry it, perhaps from 20 per cent. moisture content as it comes off the farm down to 12 per cent. That would extract moisture from the grain equivalent to 10 per cent. of the original weight, so 34p of the original levy on the tonne of grain would evaporate. The merchant would get the benefit of that much because he would have deducted it from the price paid to the farmer. That is the first of several instances where bigger farmers have an advantage over smaller farmers in the levy system.

Mr. John Carlisle: I should correct the hon. Gentleman on that. There has been a ruling now that the levy is to be paid on the dry weight, not the wet weight, so what the hon. Gentleman has said is not strictly true.

Mr. Home Robertson: It may not be strictly true, but in effect it is true, because that is what is happening. [Interruption.] The hon. Gentleman can talk until he is blue in the face, but merchants are deducting the levy from the weight of the grain that is transported away from the farm. Perhaps the hon. Gentleman can explain how that can be undone.
That is one example of the way in which this system will militate against smaller farmers. In general, they do not have the drying equipment to enable them to get rid of the moisture in the first place.
To return to this theoretical batch of grain, if it is barley of malting quality or wheat of milling quality, the merchant will either sell it to a British maltster or miller, or export it, perhaps, to Germany. The British maltster or miller, as a leviable cereal user, would have to collect the levy from the merchant and pay it on in due course to the United Kingdom authority, which would forward it to the authorities in Brussels.
The bureaucracy and paperwork involved in all those transactions represent a great deal of expensive hassle to all those involved in trading in grain. That must act as a disincentive to people who should be encouraged to use grain produce here in the United Kingdom. The position

is one stage worse if the grain is being exported within the Community, especially into Germany, because recent fluctuations in exchange rates mean that the effective levy on British grain would be £4·60 a tonne instead of £3·73 a tonne. That will presumably make it more difficult to export our grain to the Community. That is yet another disincentive to use our grain and yet another factor which could drive even more grain into intervention.
Life gets even more complicated with feeding grain. Some feeding grain may be sold on to someone who will mill it and feed it to his livestock somewhere within 1.5 miles of his mill. He would then be exempt from paying the levy. Theoretically, the levy should be paid back to the original producer since his grain has found its way to an exempt user. Generally, that simply cannot be done. No doubt even the hon. Member for Luton, North (Mr. Carlisle) will understand that point. When feeding barley or wheat from several farms is stored in bulk together in a merchant's silo and some of it goes to an exempt user, there is absolutely no way of establishing which producer's grain has reached the exempt end user. So that element of the levy which has been collected from the farmer will never be paid to the European Community. It will simply disappear into the system.
I spoke to one large user of feeding grain yesterday who told me that he has £15,000 of levy paid into a special bank account and that he does not know what to do with it. Since it is related to grain fed on his farm within the exemption criteria, that money is not due to be paid on to the authorities as levy. Since there is no way of establishing who produced the grain and paid the levy in the first place, it cannot be repaid to the producer. That is a genuine problem.
I imagine that similar things must apply to a number of big, integrated operations. People such as Bernard Matthews may be in a similar position. What justification can there be for devising an exemption scheme that can give substantial advantages to certain big farmers who have large integrated enterprises that produce grain, mill it and feed it to livestock and poultry, while penalising small grain producers and discriminating viciously against feed milling and compounding businesses? What on earth have these people and their customers done to deserve such disruption and unfair discrimination?
Not surprisingly, mobile milling and mixing operations are doing a roaring trade, processing feed on or near farms in order to exploit these loopholes. We could go on to discuss—and no doubt we shall—other aspects of this dotty system, such as the retrospective levy on grain traded before the system was introduced.

Mr. Derek Conway: Does the hon. Gentleman accept that, to a degree, he is preaching to the converted? Even my right hon. Friend the Minister has said that he does not like the system. Bearing in mind the time limit on the debate, rather than hear more about the problems, perhaps the hon. Gentleman will tell us the Labour party's proposals that might be acceptable to the other 11 countries and possibly reassure British farmers and their interests.

Mr. Home Robertson: I am delighted to hear that the hon. Gentleman and, apparently, the Minister will vote against the levy. However, he must bear with me for a minute or two.
It is important to understand just how daft the system is. I referred to the fact that the levy is retrospective on


grain that was traded before the system was introduced. There is the question of the levy that has to be paid on screenings that are taken out when cereal seed is dressed and the apportionment of levy on feed mixes, which include whole grain. When you eat your muesli for breakfast tomorrow morning, Mr. Deputy Speaker, you may care to ponder on the fact that the whole grain is not subject to levy while the milled grain has been subject to the levy. Then, of course, there is the whole business of getting exemption certificates on grain carried over from the previous year, which is likely to get even more complicated if the levy rate is varied next July, as seems likely. The hassle involved in this scheme is out of all proportion to what it is worth.
I suspect that the whole elaborate bureaucratic farce would do credit to the authors of "Yes, Minister", especially since the Minister has said that he is opposed to the idea of a co-responsibility levy. However, the officials at the Ministry of Agriculture, Fisheries and Food have really excelled themselves this time. They have devised such a moronic scheme that it has actually been adopted as a blueprint by the European Commission and recommended for use in other European countries.

Mr. Peter Hardy: Before the European countries pursue the model that my hon. Friend has described, and in reference to the point made by the hon. Member for Shewsbury and Atcham (Mr. Conway), is my hon. Friend aware that after watching a programme on Central Television at the weekend, which presented a story of malpractice and fraud, I tabled a series of questions last night in which I suggested that the Minister of Agriculture, Fisheries and Food should remove the document and examine the whole policy and management of intervention grain in this country forthwith?

Mr. Home Robertson: I know that my hon. Friend has tabled a series of questions on this subject. He is quite right to suggest that the whole intervention system is wide open to abuse.
Speaking of abuse, I should like to refer to the way in which other countries operate within the cereals regime. For instance, we understand that the Italians have not been quite as daft as to accept this system. Instead of going to such frantic lengths to collect levy on 75 per cent. of cereals, the Italian Government have done a deal with the Commission, whereby they will simply pay a lump sum equivalent to the levy on 22 per cent. of their cereal crop. They will not bother to collect the levy from their producers or consumers. Perhaps the Minister can confirm that. In this instance, I suggest that the Italians have treated the whole idea of the co-responsibility levy with the contempt that it deserves.
I want to summarise briefly the points about the levy. It is hitting consumers as much as it is hitting producers. The psychological effect is equivalent to regarding it as a tax on grain. The levy will make it more difficult to dispose of grain. Secondly, the levy will not reduce production, so it will probably have the net effect of increasing the size of the grain mountain. Thirdly, as I have already explained, it will not cover the cost of the intervention system and the export subsidies. Finally, as I have tried to demonstrate, it is an administrative nightmare, fraught with anomalies that discriminate unfairly between producers and consumers.
There are alternatives. If we must have a levy—and we may have to have one — it should be based on acreage, or it could be collected like the Home Grown Cereals Authority levy on all farm sales, which would at least be a tax on production rather than consumption. Better still, the intervention price could be cut, which would have the combined attraction of saving taxpayers' money and penalising those producers who are growing grain that cannot be marketed.

Mr. Colin Shepherd: Will the hon. Gentleman give way?

Mr. Home Robertson: No, I will not give way. I know that the hon. Gentleman and many other hon. Members wish to participate. I have already been generous in giving way, and I am concluding my remarks.
The levy is nonsense. The industry knows that it is nonsense, and it has been universally condemned by the representative organisations of the farming, grain trading and processing industries and those who use cereals—specifically I can cite the National Farmers Union, UKASTA and the British Poultry Federation, which has briefed all hon. Members on this point.
The Minister knows that the levy does not make sense. The House will do all concerned a great favour by flinging out the regulations tonight and telling the European Commission to come back with more intelligent proposals.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Donald Thompson): I thank the House for its warm reception—I hope that it is as warm when I finish my speech. I shall not speak for as long as the hon. Member for East Lothian (Mr. Home Robertson), as I know that many of my hon. Friends wish to take part in the debate. As the hon. Member for East Lothian understands, I regret that my right hon. Friend the Minister of Agriculture, Fisheries and Food is in Europe chairing the Council.
The hon. Member for East Lothian sketched the European problem. However, the world is full of cereals. The picture has changed dramatically over the past decade. China and India are now food exporters; Canada, Australia, the United States of America, Europe and other countries could produce even more, if it could be sold. The tragedy of the Third world is one of distribution and political will. That tragedy is our problem tonight and every night, but it is not the subject of this debate.
Even in my working lifetime we have imported wheat from Russia and the Sudan. Russia will not be an importer for ever. We are debating the narrow issue of Europe and the changes that were agreed at this year's price fixing. We are debating one part of one change only — the co-responsibility levy. This is not the Second Reading of a price-fixing 1986 European Bill. We are debating the regulations. The Government have accepted responsibility for the collection of the levy. Voting against the regulations concerning the mechanics will help no one.
The distortions supposedly seen by some in the new market are different, depending on their viewpoint. Voting against the regulations will change no one's viewpoint outside the House. The Government have made their position clear in Europe. Voting against the regulations will not stifle that clear voice. It will not help our negotiators in Europe, because the path has been laid out


before us and to vote against the administration of the levy will be seen—because that is all that it is—as a purely United Kingdom matter.
To achieve their objective the regulations lay down a number of administrative requirements. They provide for the operation of a register of cereal processors by the Intervention Board. They enable the board to recover the levy in cases of non-payment. They require the keeping and production of necessary records, and they provide for the necessary powers of entry and for offences.
The regulations do not deal with the key issue of who pays the levy, the circumstances under which it is payable, or how much it should be. That does not mean that the Government are not listening to the many points of view and the valuable ideas expressed in the debate. Many of those points were foreshadowed in the speech by the hon. Member for East Lothian and I am sure that he has read the brief that was sent to all hon. Members.

Mr. Austin Mitchell: Presumably the Minister is here to answer questions on something about which we will not be allowed to vote. Can he tell us why it is legitimate to tax the consumer for the faults resulting from the over-production of the producer?

Mr. Thompson: It is not a tax on the producer or the consumer; it is a co-responsibility levy.
The hon. Gentleman makes up his own mind when he wants to vote and then decides which side he wants to vote for. I am sure that he will put his question more clearly later. As I hinted, the co-responsibility levy was not the Government's preferred option although the hon. Gentleman will not find any quotes from me on the matter.

Mr. Andrew Hunter: Can my hon. Friend clarify one point? Is it not right to argue that the co-responsibility levy, warts and all, formed part of an overall package of appreciable savings to the Common Market and that that is welcome?

Mr. Thompson: I have always wanted to say, "I am coming to that" and I can tell my hon. Friend that I am coming to that. As I said, the co-responsibility levy was not the Government's preferred option.

Mr. Teddy Taylor: Perhaps the Minister would stop being so apologetic for this proposal. The taxpayers of Europe are paying £150 million a week for the dumping, destruction and storage of food surpluses and, according to the EEC, the consumer is paying £13 a week more for his food because of the CAP. Surely it is right that producers should carry some responsibility as set out in this proposal.

Mr. Thompson: That is a turn-up for the book. I agree entirely with my hon. Friend. This proposal represents the first real progress we have seen to bring cereals into a better balance. The order sets out the initial framework, and a better balance will be achieved in three ways. First, charging the levy on sales into intervention means that the effective level of support is reduced. It is like a cut in the intervention price in its effect on producers. In combination with the other measures adopted at the price fixing, it is part of a package which led to a marked reduction in support levels. Secondly, we were able to avoid the discrimination against the United Kingdom which is often inherent in co-responsibility levy systems. Finally, given the importance which the Commission and

some of the other member states attached to the idea, it was an essential part of a satisfactory price package for the United Kingdom.

Mr. Nicholas Winterton: I am listening with considerable care to the excellent argument that my hon. Friend is deploying. It would help Government Members who have agricultural interests if my hon. Friend could tell us why so many of the organisations that represent agricultural interests are opposed to the levy. As we have been told, the British Poultry Federation has issued a circular to all hon. Members urging them to vote against this order. It would help us quite immensely if my hon. Friend could tell us why there is so much opposition to the order.

Mr. Thompson: Many people are opposed to it because it is untried and new. The levy will not reduce production unless it is taken in conjunction with other things. The Community needs to adopt further measures, some of which were hinted at in the debate. Our countryside, our farmers and producers must be protected but there must be other measures as well. By and large, the outcome of the 1986 price fixing for cereals is quite an achievement.

Mr. Alexander Eadie: The hon. Gentleman is handling a difficult brief with a great deal of humour. May I try him again on the question put to him by his hon. Friend the Member for Macclesfield (Mr. Winterton) who said that all the poultry businesses are against this? In all the circulars that I have received the authors are arguing, at least in Scotland, that this will disturb the free market and disturb competition. It is not being operated uniformly. What is the Minister's reaction to that? The Minister would agree that his party is more wedded to the free market than mine. I am told that this is not a Scottish problem but an English problem. The Minister says it is a United Kingdom problem, but that is not the case because industrialists in Scotland say it is purely an English problem because in Scotland there is a net deficit.

Mr. Thompson: The representations received by the hon. Gentleman are received by all hon. Members. They come down on both sides, some supporting the case of the millers and some the case of the users. I shall come to that shortly. There are serious doubts in the minds of farmers and others, but the hon. Gentleman will appreciate that I cannot deal with them all tonight. The most important of these is the discrimination felt to be caused by exempting from the levy the grain processed into animal feed for stock on the same farm, but charging the levy on grain used by commercial compounders. We have done our best to ensure that the farms exempt from the levy on grain which they process are genuine farms. The value of the output of the feed compounding industry last year was £1·8 billion. People processing on the farm will have exemptions valued at probably less than 1 per cent. of that.
There is a strong cry for equality of misery and we have heard that cry during the debate. There may be other ways of proceeding and we shall certainly need to look carefully at the issue and its development. It is realistic to assume that the levy is here for some time. It is favoured by the Commission and by some member states because it is putting money into the coffers of the Community to the tune of £400 million. Our figures differ but not much.
The mechanism will not remain unchanged. We must look for changes that ease the burden on producers and


traders in the United Kingdom. A certain, though limited, distortion is inevitable in any levy system. As I said earlier, that is one of the reasons why we have never been enthusiastic about the principle. Serious problems have arisen mainly because of the haste with which the system was introduced. In an ideal world the Community would never have set its timetable in the way it did.
Many issues needed clarification and many difficulties remain, notably the question of how to fulfil the requirement that the levy, although collected at the processing stage, should be passed back to the producer. I will not go into these now, because I want to hear what hon. Members have to say about them. With the cooperation of the industry, we have been able to sort out many problems and we shall certainly try to continue this process.

Mr. J. Enoch Powell: I am grateful for this brief opportunity to protest against these proposals on behalf of many of my constituents, and many in the Province of which my constituency is a part, who will suffer as a result of them.
Tonight is one of those miserable occasions to which the House has become accustomed since it resigned its powers in order to become part of the EEC, when a Minister says to the House, "I don't like this proposal. I know you don't like it either. Probably no one likes it. But you'll have to put up with it because I brought it back from the EEC." It is not surprising that in a debate beginning at 7 pm the Government have taken the unusual step of deliberately curtailing so unpleasant an occasion to an hour and a half, perhaps mistaking it for one of the Northern Ireland Orders in Council.
This is a bad tax on three grounds. First, it is unjust; secondly, it is foolish; thirdly, it is damaging. The tax is unjust because it treats differently those who are producing and consuming, according to whether they belong to the same commercial organisation. That is a blatant injustice upon the face of the proposals, and is, I understand, the cause of the main complaint against them. That, at any rate, should be eliminated in any alternative that the Government succeed in putting in the place of these proposals.
The tax is self-defeating, because it operates to reduce the base which it leaves subject to taxation. The very operation of the tax will encourage those forms of production, and those links between production and consumption which enable the tax to be avoided. As a result the level of the levy will need to be increased year after year as the period that the Minister foresaw goes on. It is a self-defeating tax, or at least a self-augmenting tax, which is perhaps the worst sort of tax.
The tax is damaging, in that it will strike against both milling and producing interests in so far as they are separate. Take, for example, in Northern Ireland one milling undertaking which directly employs no fewer than 1,600 people and is in contract with over 200 poultry producers, maintaining 6 million poultry. Both the users and producers in that relationship will be damaged and discriminated against by this measure. Inevitably, the result will be the repression of certain forms of production and certain forms of employment. That is not something that can be accepted in the rest of the United Kingdom.

It is certainly not acceptable in Northern Ireland, and I shall join with those who vote against the regulations this evening.

Sir Peter Mills: In considering this measure, we must be honest and frank and say that the way in which the co-responsibility levy is being introduced and put into practice will make a terrible mess of things. Anomalies abound. Moreover, as has been said, there will be attempts to get round the levy. Indeed, that is only natural in the farming world.
This problem is entirely the fault of the EC. It was warned by my right hon. Friend the Minister, and no blame can attach to him. When the package deal was being worked out, he warned that there would be problems, and we are now seeing the results, which are not good. However, the original proposals were far worse, and would have been very unfair to British agriculture. The 25-acre exemption from paying the levy would have meant that the European countries were let off while we were penalised.
Unfortunately, this measure is part of the package deal. At the price review, the other parts of that deal were very good. For example, we wanted to continue the beef premium, and the devaluation of the green pound was certainly necessary. The sheepmeat regime continued, and we clearly wanted that. The Opposition and some of my hon. Friends do not seem to understand that the Minister had to steer a balance between what is desirable and what is negotiable. If the Socialists came to power and kept Britain in Europe, the same problem would still arise.

Mr. Austin Mitchell: Will the hon. Gentleman give way?

Sir Peter Mills: If the hon. Gentleman will allow me to make my speech, I am sure that he will have a chance to make his in a moment.
If we are dealing with many other Ministers and want a package deal, something, somewhere, must give. But having said that, changes will have to be made. The mechanism is not working correctly, and I believe that my right hon. Friend the Minister should be told that at the next price review there will have to be a change. In the circumstances, this measure was right, but it is wrong in practice.

Mr. Robin Maxwell-Hyslop: Will my hon. Friend give way?

Sir Peter Mills: I hope that my hon. Friend will have a chance to speak shortly, and that he will forgive me if I do not give way.
The most serious problem is the disadvantage to stock farmers who do not grow corn as against those who do. The difference amounts to £3·37 per tonne. A pig producer or poultry dealer who makes a small margin of profit will be put at a great disadvantage compared with the farmer who grows his grain, feeds it to his stock and does not have to pay the levy.
An old NFU friend of mine, Don Avery, of the Northern Chick Growers Association, says that it will cost his group of 140 members £250,000 extra. That is very unfair. In the south-west of England, the situation is even more serious, because we do not grow so much grain. It is purchased and brought into the area, and so we are at a disadvantage.
I shall quote from the mill manager of Dalgety Agriculture Ltd. Perhaps my hon. Friend the Minister can answer either at the end of the debate or in a letter the five serious points that he raises. The manager says:

"1. The levy has not reduced the price paid by processors and the consumer gains no benefit—it is therefore a tax on consumption.
2. It does not reduce the price to the livestock feeder who is already under pressure.
3. It encourages integrated production on the large arable units of the east at the expense of the family sized farm in our area."

That is the south-west.

Mr. Austin Mitchell: Will the hon. Gentleman be voting against the regulations?

Sir Peter Mills: The hon. Gentleman must try to listen to my speech, feeble though it may be. He can then decide whether I am right. The manager continues by referring to
4. The complete shambles that has been created in terms of administration to collect the levy.
That too must be altered. Finally, the manager says:
At the end of the day it has done nothing to reduce production and increase consumption.
Thus the principle is wrong and so is the practice. Urgent changes are required. I believe that my right hon. Friend the Minister should return at the next price review —it cannot be done here and now—and ensure that the levy is deducted from the intervention price. That seems to be fair to all, and easier to administer.
This is only one aspect of a bigger package deal for dealing with surpluses. We have to move on. We must either set aside further price reductions at the end or encourage alternative crops. — [Interruption.] Hon. Members bleat at me and ask what I would do. Action must be taken at the next price review. If hon. Members understood what has been happening, they would know that that is the solution. A further package must be agreed. I hope that the Minister will accept my view, which I believe to be the view of many of my hon. Friends, that the package is not working and needs to be changed. We accept that a package deal was agreed and that there are advantages, but there must be change.

Mr. Thomas Torney: I draw attention to the effect on the poultry industry of our agreeing to the levy. The Government have failed to fight hard enough for the needs of the poultry sector, which uses a tremendous amount of our cereal production. The Minister led the poultry industry to believe that there would be total exemption from the levy, but that will not happen in practice.
The legislation is bad because, although it operates in the interests of some, it could drive others out of business. Some poultry processors have to pay on all their grain, some are totally exempt from the levy and some are in between, paying an average per tonne depending on the percentage of throughput which is exempt.
There is considerable distortion of competition, which ranges from zero to £3·37 per tonne. Given the huge amount of feed tonnage used by the poultry sector, this amounts to a great deal of money and causes considerable disadvantage between British processors.
The levy, as enshrined in European legislation, is intended to run for five years. After talks with

Commission officials, the industry formed the opinion that if collecting the tax were successful it would be increased. The distortion of competition will therefore be increased.
As recently as 30 October the Minister said that neither he nor the House of Commons liked the levy. Thus, a vote against the order will not be a defeat for the Government, but an expression of support for the Government in restricting the levy planned in Brussels.
The levy is supposed to dissuade cereal producers from creating surpluses. It will have the reverse effect. It will stimulate production to pay the cost of the levy.
It is a bad principle that the customer should be penalised because the producer over-supplies. Normally, over-production results in lower prices. That is in the best interests of both the poultry and cereals producer. The United Kingdom poultry meat and egg industries have been systematically attacked by continental producers. According to Ministry of Agriculture figures, it seems that once again the United Kingdom has a worse deal than other EEC countries because our producers will have to pay more in levy.
The competitive position of poultry meat and egg imports will be weakened and the jobs of poultry meat and egg workers will be put at risk, as will those of workers in the cereal sector.
The levy is discriminatory between member states which have difficult internal rules. It is discriminatory between producers because some are exempt and some are not. It is discriminatory for the poultry industry because it uses so much cereal, so support prices will remain high when world prices are falling.
The effect on the farmer of a 3 per cent. co-responsibility levy is the same as a 3 per cent. reduction in support prices. However, a 3 per cent. support price reduction would have preferred effects. It would be equal for all cereal producers in the EEC and the United Kingdom and it would cut the work of the intervention board which runs the bureaucracy to collect the levy. It would represent a saving on export restitution where grain is exported and it would encourage poultry meat and egg producers, and processors, to use grain instead of cereal substitutes.
If hon. Members vote against the levy tonight they will be voting not against the Government, but against the EEC which wants to introduce a levy which no one else likes or wants.

Mr. Charles Morrison: It is a pleasure to see the heavyweight presence of my hon. Friend the Under-Secretary of State on the Front Bench in a speaking rather than a speechless role.
There are many major and detailed arguments against the co-responsibility regulations. The retrospection and exemptions cause unfairness and will continue to do so. Purchasers of grain are uncertain whether they are exempt from the levy. It benefits neither the producer nor the consumer, and it is bureaucratic. However, I realise that the levy produces temporary benefit for the European Community budget.
I am against the concept of the co-responsibility levy, not because it will achieve no purpose, but because it will worsen the problem with which it seeks to cope. An example was given to me by a senior member of the National Farmers Union in my county. He tells me that


in Austria a co-responsibility levy has been imposed since 1979. The wheat surplus has increased from 80,000 tonnes to 1·2 million tonnes in the seven years since.
Of course, the co-responsibility levy amounts to a price cut for producers, but it is not enough to be an incentive. It is the opposite. It is an incentive only to increase production to counter the financial loss which stems from the co-responsibility levy. I believe that the problems of increased surplus production will be made worse rather than better.
The basic problem which the Community faces is that grain production has grown from 100 million tonnes to 140 million tonnes per annum in the last 10 years, whilst consumption has remained static at about 120 million tonnes. As the European Commission has said, unless drastic action is taken, about 80 million tonnes will be in intervention store by 1991. The cost of that will be unbearable.
The solution proposed by my right hon. Friend the Minister is a voluntary set-aside system. I agree that any set-aside system would be better than none, but I fear that the time for a voluntary set-aside system is past. A voluntary system will not be adequate to cope with the problem facing us. A voluntary set-aside system could, of course, be accompanied by price cuts, but it is my guess that the level of price cuts necessary to reduce production would be unacceptable to other countries within the European Community, let alone to farmers in our country.
It would be necessary to have a compulsory set-aside system plus quotas. I know that quotas create huge problems, but without them agricultural science and productive farming will steadily increase the total output. A voluntary set-aside system will alleviate the problem, but only temporarily. Therefore, we must consider a compulsory system, plus quotas.
However, I am prepared to accept that my right hon. Friend the Minister of Agriculture, Fisheries and Food has done his best to deal with a bad job and remove some of the rougher edges from the co-responsibility levy. I am therefore prepared to support the Government on the basis that next year my right hon. Friend will be fighting with his colleagues in the Council of Ministers to produce a better regime to cope with grain surpluses.

Mr. Robert Maclennan: It is a pleasure to follow the hon. Member for Devizes (Mr. Morrison) because I very much agree with his view on a long-term solution. I am happy to forestall the intervention from the hon. Member for Southend, East (Mr. Taylor), "What would you do?", by saying so. The proposals described by the hon. Member for Devizes were advanced in a White Paper published by the Social Democratic party in December 1985, and were also advanced by alliance spokesmen in the debate last January. So our proposals providing an alternative means of dealing with the endemic problem of surplus cereals within the Community have been well worked out.
I should like to welcome the Minister to his new office. His performance tonight has been amiable. However, it left more questions in our minds than it gave answers, which is becoming a pattern with Ministers who speak for the Ministry of Agriculture, Fisheries and Food. They say

that they want to hear what the House has to say, but they go away and do almost the opposite of what the House said should be done.
The origins of this fiasco should be laid not at the door of the Minister, but at that of his superior whose absence tonight is quite understood. However, the Minister cannot escape blame for the imbroglio into which he has plunged almost all sectors of agriculture by his actions.
The Minister of Agriculture, Fisheries and Food described the needs of the cereals industry in a speech that he made in Berlin in January of this year. He set out his philosophy quite clearly in that speech by saying that he rejected the quota approach. In fact, he said that he favoured a free market approach. His actual words were:
The alternative to the quotas is to expose the industry to more market forces.
Whatever the Minister has achieved since January, it cannot be said that he has exposed the industry to more market forces. He has introduced a form of penalty which is more damaging than a simple price cut. Indeed, it has no benefits for consumers or producers and few for taxpayers.

Mr. Hunter: Will the hon. Gentleman give way?

Mr. Maclennan: No, time is limited and it would be unfair to the hon. Gentleman's colleagues to give way.
Perhaps the most serious thing that the Minister said was that it is realistic to accept that we shall have to live with the co-responsibility levy for some time. That is not necessarily the case, and would not be so if the Minister and his colleagues in the Council of Ministers took a trenchant stand and fought for a more rational system. We need only consider milk. Co-responsibility levies were quickly proved to be a wholly inadequate way of dealing with milk surpluses. The European Community came round to the recognition that quantitative limits on price support would be an appropriate and effective way of dealing with the problem of milk. The Minister will never get it right if he sets his face permanently against that approach.
However, the Minister introduced the co-responsibility levy reluctantly, and has, in a sense, tried to wash his hands of all responsibility for it. In a statement issued in mid-July after the regulations had been drawn up, he said:
A levy had to be accepted in order to achieve a sensible and effective settlement on cereals as a whole.
Nobody who trades in or produces cereals believes that the last price fixing resulted in a sensible and effective settlement on cereals as a whole. Nor did consumers of cereals, for example—the livestock sector—believe that the settlement was sensible or effective.
The price paid for this mess seems to have been high. It has been a system which, in the short term, greatly distorts trade. Cereal users who process on-farm can enjoy an advantage that is not available to other cereal users.

Mrs. Elizabeth Shields: It does discriminate because those hit hardest by the levy are those livestock farmers who do not grow their own cereals. Many have small family farms and are now at a competitive disadvantage—

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I hope that the hon. Lady realises that this is a short debate and interventions must be genuine and short.

Mr. Maclennan: I am grateful to my hon. Friend the Member for Ryedale (Mrs. Shields) for making that point.


The distortion is not only between different types of users, as she rightly said; there is also a regional distortion in that those who depend on grass and cannot process on-farm are suffering considerably. That is especially true of parts of Wales and the west country. Nor can it be said that the distortions are operating only on the farms. They are also operating in respect of different types of merchants—the compounders and processors are being hit hard. Nor can it be said that this has been operated with equity throughout the European Community, because under the arrangements which are operating to exempt small producers in Spain, about 90 per cent. of cereal users are totally exempt from the operations of the levy.
What will be the long-term effects of this? If the levy were to be kept at its present level, the distortions would grow as people adapt to what has happened. There would be more on-farm processing. There would be more vertical integration. There would be more use of mobile units and mixers. That would be extremely undesirable because economies will not come from that. There will be considerable diseconomies and considerable unemployment in the area of processing.

Mr. Hunter: Will the hon. Gentleman give way?

Mr. Maclennan: No, I shall not give way because, as I have already said, the debate is short.
Is all this misery worthwhile? Will it produce the results? Will it succeed in reducing the mountain? Austria has been given as an example already. The Community is unlikely to introduce a truly penal level that hits deeply, but at any conceivable level the operation of the levy would not reduce the mountain. It will simply continue to exacerbate the distortions in trade.
We must ask what the Minister will do about the anomalies that have emerged. Will the industry have to live with this for the full five years? We have been told that we must live with it for some time, but what do the Government want? Do they want to abolish it or live with it? What amendments are being discussed with the Council to remove the anomalies? Does the Minister intend to introduce an audit system to ensure that any levy deducted from growers is passed on to the Intervention Board, as has been advocated by the National Farmers Union? Does he intend quietly to acquiesce in, or even possibly to advocate, an increase in the levy in order to tackle the cereal surplus problem?
Those questions must be answered and they should be answered tonight.

Mr. Deputy Speaker: I am grateful for the brevity of the Back-Bench speeches. I remind the House that the debate will finish at 8.39 pm and that the Front Bench spokesmen hope to catch my eye at 8.35 pm.

Mr. Derek Conway: Last Thursday the Minister of State told the House that the cereal forecast for this year is 24·6 million tonnes. Therefore, the size of the problem is well known to hon. Members.
An interesting breakdown was given in the agricultural review. Within the cereals production for 1985 was 11·9 million tonnes for wheat, 9·6 million tonnes for barley and 0·576 million tonnes for oats. Therefore, the scale of the wheat problem in particular is put in perspective. Cereal production in Britain represents 19·4 per cent. of the gross agriculture output.
Britain's particular problem in relation to our membership of the EEC is that we produce 21 per cent. of the Common Market's wheat production and 24 per cent. of barley. Therefore, we are a major contributor to the problems that we face in the Community.
Of the different groups who have been represented so far in tonight's debate, I was fortunate enough to meet representatives of the Shropshire branch of the Country Landowners' Association on Monday. As my hon. Friends will know, the CLA is particularly worried that the levy is being imposed retroactively on contracts entered into before the levy was introduced. That is a most unfair way of treating the agricultural community. One wonders whether it is legal.
The reason given for back-dating was to prevent fraud, but that is unacceptable. Fraud should be dealt with in the normal way with the guilty party being prosecuted. The measure should not have been introduced retrospectively across the board, catching the innocent producer.
The Shropshire branch of the NFU made its views clear to me on that issue, as it does on many issues relating to agriculture. It feels that the levy will be impossible to operate fairly, and I think that that view is shared by both sides of the House. The levy will inevitably cause an imbalance for arable and livestock farmers and the exemptions will be difficult, if not impossible, to monitor. I hope that when my hon. Friend the Minister replies he will explain the Ministry's opposition to a proper audit on the deduction of levy from growers because that is a point of considerable concern to the industry.
UKASTA believes that this is an effort and expense for both trade and Government which is not justified and will leave the present problem unresolved. It is particularly concerned about the lack of consultation and preparation. I can only wish it well in its legal action against this unfortunate and hopeless measure.
The Commission's objective of a policy for quality is unlikely to be obtained. I do not think that any hon. Member thinks that it will curtail surpluses. Again, we do not believe that that will save some of the costs of sustaining those surpluses.
Therefore, we must look at the problem into which the Government have got themselves. They sought a package of measures, including price restraint and set-aside, which were not acceptable to the other 11 member states. There again, the options supported by the other 11 would have been far worse for Britain if our Ministers at the negotiating table had not been strong minded and had not fought off the proposals. The House and the Opposition must recognise that. Indeed, the industry must recognise it and give credit where it is due.
My right hon. Friend the Minister of Agriculture, Fisheries and Food, speaking in the House last week, said that he did not like the measure. My hon. Friend the Parliamentary Secretary, in his spirited defence of the Ministry tonight, has repeated that view. Therefore, that view is shared on both sides of the House. Bearing in mind the advantages that came out of that package, particularly the beef premium, we shall move forward at the next round of negotiations.
The Opposition must not try to kid the Conservative party that their motion tonight achieves anything. It has not split the Conservative party on the Back Benches and that will be reflected in the Division. Equally, as I know only too well from my meeting in Shrewsbury on Monday, it does not fool the farmers. They are aware of the


problems that exist and that something must be done. Undoubtedly, we are faced tonight with a great deal of EEC gobbledegook, which is not welcome in Britain, but at the moment we have no way of getting out of it.
My message to my right hon. Friend would be to urge him in future to do it the French way—when the matter goes back to the negotiating table, make sure we follow the advice from Shropshire and put Britain's interests first, second, third and fourth in future negotiations.

Mr. Gavin Strang: I am not sure what is more demeaning of Parliament—a Minister who tells us that we cannot vote against this measure because it will be a meaningless gesture, or Tory Members of Parliament who tell us how much they are opposed to this and how damaging it will be to agriculture, but are not prepared to vote against it.
We are debating an important development in agriculture policy. It is a reflection of the low priority that the Government have increasingly attached to agriculture that we are having to encapsulate all the speeches and arguments within one and a half hours.
When the Minister says that it is realistic to assume that the measure will be with us for some time, by gum, he is right. First, we know that it will not necessarily stay at £3·37 a tonne. It could become an even greater imposition on our industry. Secondly, we have been down this road before. We have had the milk co-responsibility levy. In passing, may I say to our Front Bench that we shall be more enthusiastic about cereals quotas when we see them having an effect on the milk surplus after all the traumas we went through on that.
Not one hon. Member has argued that this measure will solve the problem — the common agricultural policy. That is costing us — all the member states of the Community—about £15,000 million a year, the bulk of it being wasted in intervention and storage and export subsidies.

Mr. Hunter: rose—

Mr. Strang: The measure will not cut the cereals surplus, which has been rising and which is costing us so much money. There seems to be a consensus on that. Yet, apparently, we are not going to reject it, judging from some of the speeches of Conservative Members. It is an imposition on our industry for a number of reasons. First, it discriminates against small farmers. In the main, small farmers use compounders while the larger farmers tend to be able to undertake their own compounding and mixing. Secondly, it discriminates against the feed compound industry, as the right hon. Member for South Down (Mr. Powell) and others have argued. It is an industry that is providing a valuable service in terms of processing and employment. It is also a serious imposition on our pig and poultry industries as it is understood that about 70 per cent. of the cost of production in these industries is accounted for by cereals.
The position of certain operators in the poultry industry will be undermined arbitrarily. We have had a successful poultry industry over the years, but it has been crippled progressively for various reasons that I shall not develop now. It can be said, however, that in this country we took a lead in the poultry industry. If a large

proportion of an enterprise's poultry production is within 15 miles of its feed compound unit, it will not pay the levy on that element of the cereal input. The bulk of large producers, however, have most of their production more than 15 miles away from the feed compound unit, and these may be the most efficient producers. Through this measure, we may be discriminating against the best companies that we should be encouraging to expand.
The measure is an attack upon the poultry industry because it will in practice discriminate against British poultry producers. My hon. Friend the Member for East Lothian (Mr. Home Robertson) has said that Italy will not operate the proposed system and instead will chip in roughly the sum that the Commission reckons would be raised. In other words, Italy will forget about it. I am not sure how many Conservative Members have been to France recently or have spoken to those who have. We are always the first to develop our bureaucracy and intervention systems. We shall police the system and ensure that it is operated effectively, but is anyone pretending that the French will do that? Of course they will not. We know that and our industry knows that. That is why the measure discriminates against our producers and attacks our industry and our jobs.
The effect on trade outside the Community is not all that important because of the high cereals prices. The export subsidy to shift grain from the Community is about £80 per tonne. I note that the Minister is nodding his head. He will be aware that the world price of grain is about a third of the price at which it is being traded within the EEC. That goes back to the deal which was struck between the German and French Governments long before we joined the Community. It is a grotesque system. As I have said, about 70 per cent. of costs in the pig and poultry industries is accounted for by cereals, yet the cost of production is about three times the world price. Against that background there is no chance of our poultry industry making any impact on world markets.
This measure is nonsensical and it is not good enough for Conservative Members merely to make speeches that are critical of it. We want it to be defeated this evening.

Mr. John Carlisle: As a member of the trade, perhaps I might correct one or two of the anomalies that have developed this evening. First, the impression has been given—sadly by both sides of the House—that the trade is in utter chaos because of the co-responsibility levy, that our trade feels discriminated against in certain sectors and that prices have made us uncompetitive. That is not true. The trade does not like the levy and we support the Minister in his opposition to it. I support and welcome the spirited speech of my hon. Friend the Minister which was made in difficult circumstances.
There is no chaos but there would be if the levy were to be increased next time round, and that is my greatest fear. There has been some talk that the levy could be doubled, and if that were to happen the impact upon our producers and consumers would give effect to the fears that have been expressed this evening. The effect on the compound industry could be catastrophic. The number who mill and mix on their own farms would increase, and that would mean a serious loss of employment in the compound trade. My hon. Friend the Minister must resist any increase in the levy this time round.
An increase in the levy would encourage the use of Third world substitutes, and there is no doubt that cheap substitutes exist. If we price ourselves out of the market by putting our prices for feed wheat and feed barley above those that the trade has to pay for Third world substitutes, there would be a massive switch to those products. That would be a catastrophe for the compound industry and for feed users and for those who grow the grain.
If the levy were doubled, as has been rumoured, the evasion which has been hinted at tonight on the part of various producers would be encouraged. At present, there is no evasion and the trade is living with £3·37. It does not like the levy and farmers do not like it, but we are living with it. If the levy were increased, the impact upon the trade would be severe.
One of the reasons why we have got away with it, as it were, this time is that the price has risen for market reasons. Producers in the southern Mediterranean region had a disastrous harvest and they need our grain. As a result, the price is high. Had the price been low, the effect of the £3·37 levy would have been felt. If we had had wheat and barley on the farms at £90 a tonne, the £3·37 levy would have had a very much greater impact.
I ask my hon. Friend the Minister to resist in the price review any increase in price. Indeed, we would like to see a reduction in price if possible. Secondly, he must change the system whereby the levy is paid at the point of sale. I agree with the hon. Member for East Lothian that the fact that the levy is paid at the point of processing means that in some instances it will not be paid. In some instances, merchants may hold the money and never pay it over, or may do so only unwillingly. If we are to have this awful system, my hon. Friend must try to alter the point of sale. I hope that on these two matters my hon. Friend will get the message through to his right hon. Friend the Minister of Agriculture, Fisheries and Food.

Sir John Farr: I join those who have criticised the measure that is before us, and my criticism can be boiled down to four reasons. First, I do not like the retrospective element. That is not the way that we do things in the United Kingdom. It is entirely wrong also that we should have only and hour and a half to debate such a major change. Secondly, extra policing will be required by the Ministry. We have introduced the horrible co-responsibility levy, and if the centres of operation of a farm are more than 15 miles apart the undertaking may not mill its own grain without paying the levy, but how will this be monitored? I know that many farmers, not necessarily large ones, have specialist operations that are much more than 15 miles apart. That distance is nothing, especially in the midlands where we have an excellent road system. We in Britain do not like passing regulations that we cannot enforce or monitor. I do not imagine that my hon. Friend the Minister contemplates a large increase in the Ministry's inspectorate as a result of this measure, but I think that he will get it, however. I hope that he will pay especial attention to that consequence.
Thirdly, will it be a fact that any farmer who mills his own produce will have to have a CCL 9 before he can continue to do so? Will he be exempt without an application for a CCL 9?
I shall vote for the measure. I know that the Minister fought against it in Brussels. It is part of a package, but

it will be a sad day for farmers when we have a co-responsibility levy such as this. It would be better, as has been said before, and possibly will be said in future, to have a straight price cut. That is the simple approach for the House to adopt.

Mr. John Townend: I congratulate the Parliamentary Secretary on his appearance at the Dispatch Box. He has had his baptism of fire—not that there has been much fire from the Opposition. It is clear, looking at the empty Labour Benches, that he will have to consider what is said behind him rather than what is said in front of him.
I have the privilege to represent the constituency in Britain with the highest number of pigs. Indeed, there are more pigs than people. To serve that industry, a number of important compound feed merchants have developed. In our area, there is considerable concern about this levy. The main criticism, as many hon. Members on both sides of the House have said, is that it is unfair. It is not evenhanded between one producer and another and, therefore, it distorts the market.
The first matter to which I should like to draw the attention of the Parliamentary Secretary concerns large pig breeders who have been buying considerable quantities of feed from efficient compound manufacturers. They will be put at a distinct disadvantage in competing with pig farmers who mill on the farm. This is discrimination. To make matters worse, I understand that there is an anomaly in the definition of "producer". It was originally assumed that the word meant a producer of cereals, but I understand that it was subsequently resolved that the definition included a livestock producer who did not produce cereals.
The second serious matter is the effect of the levy on the compound feed manufacturer. Undoubtedly, there will be an incentive to expand milling on the farm. This will affect the throughput of manufacturers, their profitability and, inevitably, if the levy continues, employment. It might be said that at £3·37 a tonne, the impact will not be great. The feeling on both sides of the House is that this levy will not achieve the objective of reducing surpluses. At the time of the next price review, there will be considerable pressure to increase the levy substantially. There has been talk in the trade of the levy going up to £10 or £15 per tonne. That would be catastrophic. The distortions and the anomalies will have a frightening and unfair effect on people in the farming and compound feed manufacturing industries.
We realise that the Government fought very hard against this levy. We appreciate that it was part of a package. There is not much that we can do about it at this stage, but we strongly urge my hon. Friend the Parliamentary Secretary and his colleagues, when they go back to the negotiating table, to get rid of the levy and sensibly attack subsidies by policies of set-aside and of price reduction. That course is very important, and I urge it upon my hon. Friend.

Mr. Donald Thompson: By leave of the House, Mr. Deputy Speaker, may I say that time is short, so I will not have an opportunity to reply to all contributions to the debate. Much of the trade comment in recent weeks and some comments during the debate suggested that we would be better off without a levy. That may be so, but


the Council agreed that it would be introduced. In view of its potential value in supporting the Community budget and the positive support that it enjoys in the Commission and in other member states, it would be unwise to regard its immediate elimination as a likely option.
I listened carefully to the debate. I shall draw the attention of my right hon. Friend the Minister to the wise words of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) who was supported by my hon. Friend the Member for Devizes (Mr. Morrison) and also —I thank him for his nice words—by the hon. Member for Caithness and Sunderland (Mr. Maclennan). The hon. Gentleman mentioned co-responsibility levies. The co-responsibility levy on milk continued for a long time and was not adequately supported by other measures. As I said earlier, we must make sure that we support this co-responsibility with other measures, many of which have been trailed during the debate.
My hon. Friend the Member for Shrewsbury and Atcham (Mr. Conway) mentioned retrospectivity and the legal action that is in train. He also mentioned audit. The brief on the audit matter that hon. Members received may have misled them. That matter still lies on the table. We are ready to discuss some sort of realistic, cost-effective, simple audit. Simplicity and cost-effectiveness will be difficult to achieve. The hon. Members for Edinburgh, East (Mr. Strang) and for Bradford, South (Mr. Torney) mentioned poultry with some ferocity. [Interruption.] They were not hen-pecked, of course. In real terms, grain prices are 50 per cent. lower than they were 10 years ago, and at present our grain prices are the cheapest in Europe. That does a great deal to make our poultry industry efficient.
I thank my hon. Friend the Member for Luton, North (Mr. Carlisle) for his clear and well-informed speech which set many matters straight. I listened carefully to what he said about future price reviews and point-of-sale levies. The co-responsibility levy is just one element in the policy that the Community is pursuing in the cereal sector. The Government agree that the levy on its own will not cure the sector's problems. The Community must not forget the crucial importance of maintaining a restrictive approach to overall support. The Community also needs to examine further measures to bring about structural changes which, in one way or another, are inevitable. For better or for worse, we must assume that the levy will continue to apply for some time. Annulling the regulations will do nothing to alter that.

Mr. Home Robertson: By leave of the House, Mr. Deputy Speaker, I join other hon. Members in congratulating the Parliamentary Secretary on the way in which he has tried to hold his untenable position. He has conducted himself with characteristic charm and good humour. I suppose that those qualities have led the Minister of Agriculture, Fisheries and Food and the Minister of State to leave him here to face the music.
As I predicted at the beginning of the debate, no one expressed any degree of support for the levy. It is not good enough for people such as the hon. Member for Devizes (Mr. Morrison) to say that they will vote for the levy with a heavy heart. I say, for the benefit of Tory Members, that that kind of cop-out will not do. This levy is damaging to

their constituents. They cannot get out of it in this way. We have sought to give the House an opportunity to vote against this useless and, indeed, positively harmful levy. I urge the House to vote for our prayer to revoke the regulations.

Question put:—

The House divided: Ayes 105, Noes 193.

Division No. 308]
[8.38 pm


AYES


Adams, Allen (Paisley N)
Lambie, David


Anderson, Donald
Lamond, James


Archer, Rt Hon Peter
Leadbitter, Ted


Ashdown, Paddy
Lewis, Ron (Carlisle)


Atkinson, N. (Tottenham)
Lofthouse, Geoffrey


Bagier, Gordon A. T.
Loyden, Edward


Barnett, Guy
MacKenzie, Rt Hon Gregor


Beckett, Mrs Margaret
Maclennan, Robert


Bermingham, Gerald
Madden, Max


Bray, Dr Jeremy
Marek, Dr John


Brown, Gordon (D'f'mline E)
Marshall, David (Shettleston)


Brown, N. (N'c'tle-u-Tyne E)
Martin, Michael


Buchan, Norman
Mason, Rt Hon Roy


Caborn, Richard
Maxton, John


Callaghan, Jim (Heyw'd &amp; M)
Maxwell-Hyslop, Robin


Campbell-Savours, Dale
Maynard, Miss Joan


Carlile, Alexander (Montg'y)
Michie, William


Clark, Dr David (S Shields)
Mikardo, Ian


Clarke, Thomas
Millan, Rt Hon Bruce


Clay, Robert
Nellist, David


Clelland, David Gordon
O'Brien, William


Cocks, Rt Hon M. (Bristol S)
Park, George


Corbett, Robin
Patchett, Terry


Corbyn, Jeremy
Pavitt, Laurie


Cox, Thomas (Tooting)
Penhaligon, David


Craigen, J. M.
Powell, Rt Hon J. E.


Crowther, Stan
Powell, Raymond (Ogmore)


Cunliffe, Lawrence
Prescott, John


Davis, Terry (B'ham, H'ge H'I)
Randall, Stuart


Deakins, Eric
Raynsford, Nick


Dewar, Donald
Redmond, Martin


Dixon, Donald
Richardson, Ms Jo


Dormand, Jack
Roberts, Ernest (Hackney N)


Douglas, Dick
Robertson, George


Dubs, Alfred
Ross, Ernest (Dundee W)


Duffy, A. E. P.
Shields, Mrs Elizabeth


Eadie, Alex
Skinner, Dennis


Eastham, Ken
Snape, Peter


Fields, T. (L'pool Broad Gn)
Spearing, Nigel


Fisher, Mark
Steel, Rt Hon David


Flannery, Martin
Stewart, Rt Hon D. (W Isles)


Forrester, John
Strang, Gavin


Foster, Derek
Thompson, J. (Wansbeck)


Godman, Dr Norman
Torney, Tom


Gourlay, Harry
Wallace, James


Hamilton, James (M'well N)
Wardell, Gareth (Gower)


Hamilton, W. W. (Fife Central)
Wareing, Robert


Hardy, Peter
Welsh, Michael


Hogg, N. (C'nauld &amp; Kilsyth)
Wigley, Dafydd


Holland, Stuart (Vauxhall)
Wilson, Gordon


Home Robertson, John



Howells, Geraint
Tellers for the Ayes:


John, Brynmor
Mr. Chris Smith and


Kaufman, Rt Hon Gerald
Mr. John McWilliam.


Kirkwood, Archy



NOES


Alexander, Richard
Bellingham, Henry


Alison, Rt Hon Michael
Bendall, Vivian


Amess, David
Bevan, David Gilroy


Ancram, Michael
Biggs-Davison, Sir John


Arnold, Tom
Blackburn, John


Ashby, David
Boscawen, Hon Robert


Aspinwall, Jack
Bottomley, Peter


Atkins, Robert (South Ribble)
Bottomley, Mrs Virginia


Atkinson, David (B'm'th E)
Bowden, Gerald (Dulwich)


Baker, Nicholas (Dorset N)
Bright, Graham


Beaumont-Dark, Anthony
Brinton, Tim






Brooke, Hon Peter
Fraser, Peter (Angus East)


Brown, M. (Brigg &amp; Cl'thpes)
Freeman, Roger


Bruinvels, Peter
Fry, Peter


Bryan, Sir Paul
Gale, Roger


Buchanan-Smith, Rt Hon A.
Galley, Roy


Budgen, Nick
Garel-Jones, Tristan


Butler, Rt Hon Sir Adam
Gow, Ian


Butterfill, John
Greenway, Harry


Carlisle, John (Luton N)
Gregory, Conal


Carlisle, Kenneth (Lincoln)
Griffiths, Peter (Portsm'th N)


Carttiss, Michael
Ground, Patrick


Cash, William
Hamilton, Hon A. (Epsom)


Chalker, Mrs Lynda
Hamilton, Neil (Tatton)


Chapman, Sydney
Hampson, Dr Keith


Chope, Christopher
Hanley, Jeremy


Churchill, W. S.
Hannam, John


Clark, Dr Michael (Rochford)
Hargreaves, Kenneth


Clarke, Rt Hon K. (Rushcliffe)
Harris, David


Clegg, Sir Walter
Harvey, Robert


Colvin, Michael
Haselhurst, Alan


Conway, Derek
Hayward, Robert


Coombs, Simon
Heathcoat-Amory, David


Cope, John
Heddle, John


Couchman, James
Hickmet, Richard


Cranborne, Viscount
Hirst, Michael


Currie, Mrs Edwina
Hogg, Hon Douglas (Gr'th'm)


Dickens, Geoffrey
Holland, Sir Philip (Gedling)


Dorrell, Stephen
Holt, Richard


Douglas-Hamilton, Lord J.
Howarth, Alan (Stratf'd-on-A)


Dover, Den
Howarth, Gerald (Cannock)


Dunn, Robert
Hubbard-Miles, Peter


Dykes, Hugh
Hunt, David (Wirral W)


Edwards, Rt Hon N. (P'broke)
Hunt, John (Ravensbourne)


Evennett, David
Hunter, Andrew


Eyre, Sir Reginald
Jessel, Toby


Fallon, Michael
Johnson Smith, Sir Geoffrey


Farr, Sir John
Jones, Gwilym (Cardiff N)


Favell, Anthony
Jones, Robert (Herts W)


Fenner, Mrs Peggy
Joseph, Rt Hon Sir Keith


Finsberg, Sir Geoffrey
Kellett-Bowman, Mrs Elaine


Fletcher, Alexander
Kershaw, Sir Anthony


Fookes, Miss Janet
Key, Robert


Forman, Nigel
Knight, Greg (Derby N)


Forsyth, Michael (Stirling)
Knight, Dame Jill (Edgbaston)


Forth, Eric
Knox, David


Franks, Cecil
Lang, Ian





Latham, Michael
Skeet, Sir Trevor


Lawrence, Ivan
Soames, Hon Nicholas


Lightbown, David
Speed, Keith


Lloyd, Peter (Fareham)
Spencer, Derek


Lord, Michael
Spicer, Jim (Dorset W)


Macfarlane, Neil
Spicer, Michael (S Worcs)


Maclean, David John
Stanbrook, Ivor


McQuarrie, Albert
Stanley, Rt Hon John


Madel, David
Steen, Anthony


Major, John
Stern, Michael


Malone, Gerald
Stewart, Andrew (Sherwood)


Maude, Hon Francis
Stradling Thomas, Sir John


Mills, Sir Peter (West Devon)
Taylor, John (Solihull)


Morrison, Hon C. (Devizes)
Taylor, Teddy (S'end E)


Moynihan, Hon C.
Temple-Morris, Peter


Neale, Gerrard
Thompson, Donald (Calder V)


Neubert, Michael
Thompson, Patrick (N'ich N)


Newton, Tony
Thorne, Neil (Ilford S)


Nicholls, Patrick
Thurnham, Peter


Normanton, Tom
Townend, John (Bridlington)


Parkinson, Rt Hon Cecil
Tracey, Richard


Percival, Rt Hon Sir Ian
van Straubenzee, Sir W.


Pollock, Alexander
Waddington, David


Portillo, Michael
Wakeham, Rt Hon John


Powley, John
Waldegrave, Hon William


Rhodes James, Robert
Walden, George


Rhys Williams, Sir Brandon
Waller, Gary


Rifkind, Rt Hon Malcolm
Ward, John


Roberts, Wyn (Conwy)
Watts, John


Robinson, Mark (N'port W)
Wells, Sir John (Maidstone)


Roe, Mrs Marion
Wheeler, John


Rowe, Andrew
Whitfield, John


Ryder, Richard
Whitney, Raymond


Sackville, Hon Thomas
Wilkinson, John


Sainsbury, Hon Timothy
Wood, Timothy


Sayeed, Jonathan
Woodcock, Michael


Shaw, Giles (Pudsey)
Yeo, Tim


Shaw, Sir Michael (Scarb')



Shelton, William (Streatham)
Tellers for the Noes:


Shepherd, Colin (Hereford)
Mr. Tony Durant and


Silvester, Fred
Mr. Mark Lennox-Boyd.


Sims, Roger

Question accordingly negatived.

Rate Support Grant (Scotland)

The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram): I beg to move,
That the Rate Support Grant (Scotland) Order 1986, dated 22nd July 1986, a copy of which was laid before this House on 24th July, be approved.
The order has two purposes. The first is to reduce the grant payable in respect of 1986–87 by £125·3 million. The second is to adjust the rate support grant payable to Scottish local authorities in respect of 1985–86, the overall effect being an increase of £69·2 million. My right hon. and learned Friend the Secretary of State announced his decision to make these changes in grant in his statement of 23 July and the order was laid the following day.
Local authority current expenditure budgets in Scotland, as measured for comparison with guidelines, come to more than £3,100 million. Thus, even before including their capital expenditure programmes, which are substantial, local authorities account for about half the expenditure for which my right hon. and learned Friend is responsible. That is a very large sum by any standards. I will not detain the House with a recital of our general policy on public expenditure. That policy, and the reasons for it, are well known. So is the success which it is achieving. The continued success of the policy will depend in some measure on our continuing to exercise careful control of local authority expenditure. In 1978–79, the year before we took office, the volume of local authority current expenditure grew by almost 7 per cent. from the previous year. Therefore, in 1978–79, local authorities increased their expenditure by 7 per cent. more than the amount required to cover increased costs.
We have now, after seven years' hard effort, stabilised the volume of expenditure. Local authorities' budgets for 1986–87 show a small reduction — in volume terms—compared with 1978–79. This is welcome and demonstrates the good sense of an increasing number of local authorities. This increasingly responsible approach by local authorities has enabled us to make the generous and realistic provision for the next financial year, 1987–88, which my right hon. and learned Friend also announced on 23 July.
However, this is no time to slacken our efforts to keep spending under control, and indeed the greater the number of local authorities that are willing to play by the rules, the more important it is that their efforts should not be jeopardised by a few irresponsible authorities. Penalties for overspending will therefore continue to have an important role until the new system of local government finance, set out in the Green Paper "Paying for Local Government", is in place.
Before I go any further, I should say something in general terms about the penalty system. I do not like it any more than do the local authorities, nor I suppose any more than Opposition Members, whose colleagues set up the system in the 1970s. But I must recognise, as did the Labour Government of that time, that expenditure has to be contained within the levels of provision that the Government have made. The penalties system is therefore designed as a righting mechanism which will put this aspect of public expenditure back on course, when a breach is threatened; and the penalty tariffs provide a strong disincentive for sensible and reasonable authorities

attempting the breach in the first place. All that has changed since the Labour Government introduced the idea is that the system now operates in a much more selective and fairer way. Previously, grant abatement affected all authorities whether or not they were high spenders. Now abatements are related clearly to the extent of an individual authority's overspend and those that keep within guidelines are unaffected by it.
The majority of authorities take heed of the guidelines that the Government set for them. The number of authorities budgeting within guidelines stood at 15 in 1984–85. This increased to 30 in 1985–86 and to 40 in the current year out of a total of 65. Several more are only just over guideline. This is clearly relevant to the Government and to the ratepayers who benefit directly from it. There remains, however, a hard core of authorities that spend well in excess of guidelines. In total, Scottish local authorities planned overspend for 1986–87 is £118 million or 3·9 per cent. Only four authorities account for £107 million or 90 per cent. of this overspend. It is right that the consequences of their action should be brought home to them and that penalties should be concentrated on those authorities. Our arrangements ensure this. I will have more to say in a moment about those authorities.
I shall now deal with the details of the order. The order falls into two parts. First, it reduces rate support grant for 1986–87 for those authorities which have planned to overspend. The needs element of rate support grant has been reduced by £125·3 million. This reduction is concentrated entirely on the 25 overspenders. As for last year, a tariff has been applied relating the reduction in grant to the overspend. This year the tariff starts at zero and rises to a reduction of 10 per cent. of the overspend for a 1·5 per cent excess. It then rises more steeply to 70 per cent. for a 3 per cent. excess and more steeply again to 110 per cent. for an excess of 3·5 per cent. or more. Annex 2 of the report contains a graph of the tariff and the calculations of penalties for individual authorities. The penalties are listed in column 7 of page 9.
The four authorities which I mentioned earlier will attract 94 per cent. of the penalty. I emphasise that it is, of course, still possible for them to recoup those penalties for their ratepayers, by reducing their overspends, and hence their penalties, at outturn. For example, an authority with a budget overspend of 6 per cent. which then halves its excess will have its penalty cut by two thirds. If it reduces its excess to 2 per cent. the penalty will be reduced in cash by 90 per cent. There is still time for those authorities to take the necessary steps, and if they do so they will be acting clearly in the interests of their ratepayers. I hope that they will take heed of this opportunity and I urge Opposition Members, if they have the ratepayers' interests at heart, to join me in urging those authorities to revise their expenditure plans now. They have of course had full notice of our intentions since 23 July, and should have been planning revised budgets since then. Indeed, in the past local authorities have reduced their expenditure substantially at outturn as indeed they did last year.
In fact, turning to the second part of the order, the effectiveness of grant penalties is demonstrated by the return of provisional outturn for 1985–86. At the budget stage 30 authorities kept within guidelines and the total overspend was £90·7 million. Provisional outturns show 37 authorities within guideline and the total overspend down to £47·2 million. The effect of this is to bring penalties


down from £126·6 million to £57·4 million, a saving of £69·2 million. Authorities, I am glad to say, clearly took heed of our exhortations. I was particularly pleased to see that Edinburgh came down to guideline last year after our selective action to reduce its rates, though it subsequently submitted a grossly extravagant budget for 1986–87, thus bringing selective action on itself again.
Details of the 1985–86 penalties are given in annexes 3 and 4 to the report. For those authorities affected, the revised penalties are shown in column 7 on pages 12 and 13 with the adjustments that will be made to grant payments in column 9.
On 23 July, my right hon. and learned Friend the Secretary of State announced the totals for relevant current expenditure provision and aggregate Exchequer grant for 1987–88. In recognition of the efforts made by increasing numbers of authorities to come down to guideline, provision was set at local authority budgets, adjusted for the interim teachers' pay award, plus 3·75 per cent., a total figure of £3,277 million. Aggregate Exchequer grant was set at £2,160 million. On 1 October we issued current expenditure guidelines to all authorities. The effect of those decisions is that there is in general no reason for rate increases next year, unless local authorities increase their spending above inflation or fail to bring their spending to guideline in the current year.
The generous overall settlement means that no authority can claim that its guideline is unattainable. Every authority has a guideline which is at least a real terms freeze on its present guideline and no authority is being asked to make a cash reduction on its present budget. Several authorities have made representations to us because they have been set guidelines below assessed need in the past. The number of authorities with guidelines below assessed need has been reduced from 30 to 19; for most of those still below assessment the gap has been narrowed and for none is it wider. It is now up to the local authorities to respond by budgeting within those guidelines. I give authorities due warning that any that do not do so will face severe penalties again next year.
Hon. Members may be wondering whether the order we are considering this evening has any implications for the discussions now taking place on teachers' pay. There are two points to make. If a settlement of the teachers' dispute is reached on the basis proposed by my right hon. and learned Friend, the costs of an additional 8·2 per cent. on the pay bill from January to March 1987—that is the part of the financial year we are dealing with in this order — will be met fully by additional provision and a corresponding increase in grant. There would be a further order in respect of the grant.
Secondly, we have indicated our willingness to meet the Convention of Scottish Local Authorities' request for a disregard in respect of £27 million of expenditure it estimates to incur this year as a result of the interim pay award of April 1986, and which is in excess of its budgeted provision. In fact, my right hon. and learned Friend and I had a useful meeting yesterday with representatives of COSLA. They were worried about the threat of renewed disruption in the classrooms if the teachers do not accept my right hon. and learned Friend's proposals for settling the dispute. The Government share that concern.
My right hon. and learned Friend's proposals are generous, offering teachers a prospect of average increases of 30 per cent. between April 1985 and October 1987. What is of concern for us tonight is the consequences for

rates. COSLA obviously shares that concern and is, so far as I am aware, entirely content with our proposals, which I have mentioned, on disregard and on additional resources and grant.
Indeed, my right hon. and learned Friend and I were also encouraged yesterday by COSLA's clear agreement on the need to secure a proper deal covering conditions of service, its concern to avoid further disruption in the classrooms, and its concern to take all possible steps within the limits of my right hon. and learned Friend's offer to secure a settlement to the dispute. We regard COSLA as having a major responsibility in the weeks ahead in encouraging the teachers to consider my right hon. and learned Friend's proposals in a moderate and sensible way.
Grant penalties are an essential part of the present system of local government finance. We inherited them from the Labour party and have made them fairer and more effective. In the present system of local government finance the disparity between those who pay rates and those who vote requires this form of constraint on local authority spending. The new system that we shall shortly introduce will be designed to improve local accountability and to remove the need for such penalties. Meanwhile, we must work within the present system. I hope that authorities which have bugeted above guideline will try to reduce their excesses. Given both the level of provision and guidelines, no authority will have an excuse for budgeting over guideline next year and thus creating a greater burden on their ratepayers. It is my sincere hope that they will not. I commend the order to the House.

Mr. Donald Dewar: There is, I am afraid, a certain familiarity about these debates. We have heard it all before from the Parliamentary Under-Secretary of State. The most depressing thing was his suggestion that he might have the opportunity of making another such speech. I sincerely hope—"sincerely" was overused in his speech — that that turns out to be unfounded.
The trouble is that the Government have got it wrong over a number of years, but they persist in their error. There is always a danger of a certain resigned acceptance among Opposition Members: Ministers are incorrigible, they are set in their ways and the only hope is that at some reasonably early date they will be summarily dismissed. That is an understandable feeling on Opposition Benches, but we have a duty to argue the case and explain and underline our opposition to the order and the general abatement that it represents.
We are discussing a form of penalty. The Minister engagingly referred to its origins under a Labour Government, but I suggest that there is one large distinction. That is that it is now being used with particular relish which, on occasions, amounts almost to venom. It has done a great deal to destroy any chance of a working relationship between the Government and local authorities. There has been scant regard for principle and, more importantly, for the needs of the community which, to some extent, depend upon the services provided by local government.
The trouble is that the penalty is based on arbitrary guidelines and is set at a level that follows no obvious or logical pattern. This year we are being asked to claw out of the budgets halfway through the financial year the


substantial sum of £125 million. We are entitled to protest about the impact and about the wrong-headed approach that the Government are displaying.
I am glad that the Minister referred to the difficulties over teachers' pay. That gives an air of particular uncertainty to what is happening at the moment. Not only are local authorities suffering from the cumulative pounding of recent years but one of their major items of expenditure under the rate support grant settlement is clouded in uncertainty. We know that the teachers' salary bill is likely to be £500 million or more, but no one knows how much more, or what will happen.
I am glad to see the Secretary of State in his place. He knows that I make no secret of the fact that we have been dismayed by the recent turn of events. I understand and recognise that there was a meeting yesterday between COSLA and the Secretary of State. It is taking the artificial conventions of dialogue beyond any useful point to describe it as a useful meeting. Having talked to some of those who were at it, I have not been given that impression. What appears to have happened— I regret this as well—is that COSLA was told in no uncertain terms that any initiative that it might want to pursue in terms of the financial aspects of the package was ruled out with a finality that does something to snuff hope of an early solution to the problem.

The Secretary of State for Scotland (Mr. Malcolm Rifkind): The hon. Gentleman will, I presume, have read the reported remarks of Councillor Fagan, the president of the convention, this morning. He said that suggestions that had come from some quarters that the local authorities might top up the costs of the Main report above the level of phasing proposed by the Government were, in his word, "preposterous".

Mr. Dewar: I have spent much time in the past 24 hours not only with Councillor Fagan but with several other local government figures who were at the meeting. Whether it is preposterous or not, let us get it on the record and clarify the situation. As I understand it—if I have misunderstood, it is important that that is made clear—even if there was such an intention or willingness to consider that possibility, the right hon. and learned Gentleman made it clear that it would not be allowed and that COSLA was told in no uncertain terms that it would meet the strongest possible opposition, and a series of barriers, financial and otherwise, which would rule out that possibility.

Mr. Rifkind: I am happy to confirm that. That is indeed what I said. I also asked the convention whether it wanted to support the suggestion of the convenor from Dumfries and Galloway region, which was that local authorities might wish to finance the difference between the phased award and a full immediate payment. I was told that, irrespective of the Government's view, the convention did not wish to put forward such a proposal.

Mr. Dewar: I am aware that Councillor Jameson of Dumfries and Galloway, who is not a member of my Parliament—sorry, party — [Interruption.] The right hon. and learned Gentleman can laugh—he is entitled to do so—but I take these things fairly seriously in view of the crisis. I am aware that that idea has been floated.

I do not speak for COSLA, and it would not be right for me to say what COSLA's attitude on these matters is, but I am clear that it sought to establish the Government's stance.
Irrespective of whether COSLA would have considered such an initiative, the right hon. and learned Gentleman and I are at one, at least, in establishing that the Government rule out that possibility. The major role for COSLA, which the Under-Secretary of State referred to, in the Government's mind at least, is simply to support the Government's departure from the financial package in the Main report. That seems a strange way in which to treat a group who are the employers and which, when, as we all hope, there is a settlement, will be faced with funding a substantial proportion of the costs.
One thing is clear. The Government have set up a confrontation — I regret that—by the decision on the Main report which was announced recently. As for local government, the Secretary of State is determined that nobody will rescue him from that confrontation. My earnest hope is that parents, pupils and the education system will not be asked to pay too high a price for the Treasury's intransigence and possibly the right hon. and learned Gentleman's pride.
On the 1986–87 figures, we are all aware that some £27 million is part of the financing of the 5·5 per cent. interim settlement and has not been budgeted for in the present figures. I am aware that there was an agreement that if a settlement was reached that sum would be disregarded in terms of penalities and measurement against guidelines.
I take it from what the Under-Secretary of State said that, even if, sadly, we do not reach a settlement in the teachers' dispute in the near future, that £27 million will be fully disregarded. I put that to him because my impression as a result of talking to people who were at the COSLA meeting—I am sure that it may just have been a misunderstanding— was that that was not clear to them.
I want to know quite clearly whether the £27 million— the fag-end of the 5·5 per cent. pay increase will be disregarded, whatever happens to the teachers' dispute. I take that to be the case from the Minister's remarks. If I am wrong, I hope that he will intervene. He does not, so I take it that I am right. I am grateful for that, and I think that COSLA will be as well. I put it to the Minister—I am right about that?

Mr. Ancram: Wait until my reply.

Mr. Dewar: We shall wait for the hon. Gentleman's reply with more interest than usual.
I must move on as there are other important matters to consider, although they do not have quite the same sharp topicality. The Minister argued that the penalties have been working and have done a great deal to restrict local government expenditure. Reasonably, from his point of view, the Minister drew attention to the fact that some £69 million of the clawback for the previous financial year has been paid back. There is, of course, an impact as a result of that type of penalty. Most extortion rackets have an impact on their victim. Of course local authorities have been forced to cut services. They have been forced to contemplate retrenchment when often social need demands expansion, but that is no defence for this form of policy. It is equally irrelevant to say that the


Government are penalising only 25 authorities when those authorities represent 73 per cent. of total local government expenditure in Glasgow.
I was not clear about the four authorities that together account for £107 million of the £125 million. I make it three authorities, but perhaps simple arithmetic is not the Minister's strong point—[Interruption.] That may also apply to myself, but I think that at least I have got it right.
I speak for every Labour Member when I say that it is unreasonable to expect the Strathclyde region to find £76 million of savings within its budget this year. Inevitably, when that is squashed into the last six months of the year it will put jobs at risk and threaten services. It will mean that the delivery of those services that can be maintained will be dangerously stretched. These are not theoretical matters or some sort of accountancy exercise. This is a threatening situation for those who are working on the ground and those who rely on such services.
Similarly, it is right to say that the situation in Lothian is thoroughly unsatisfactory to many people who have nothing to do with my political standpoint. Lothian has been penalised by £25 million, yet the Minister knows that that penalty is based upon a Conservative budget. The author of this profligacy and financial irresponsibility is Councillor Brian Meek and his Conservative colleagues. The Minister is somewhat hard on poor Councillor Meek who, after all, is an electoral victim of the Government's well-earned unpopularity — despite Councillor Meek's efforts to distance himself from the Government. It is a bit hard that he should now be condemned by Ministers for overspending. It is even harder on the people of Lothian who will see the cuts biting and taking effect.
My own city of Glasgow, which is penalised by £5·5 million, has enormous problems that are self-evident and pressing. I need not say much about them tonight, because they are in the mind of every hon. Member who represents a Glasgow constituency. It is extremely sad that we should be faced with these additional and quite unnecessary problems.
A fourth authority that is quite outwith the figures that the Minister mentioned is Edinburgh, which finds itself in a very odd situation. It has been penalised under section 5 of the 1966 Act. That is odd, because most of us thought that the section 5 procedure was no longer relevant and that it would not be used. It was, and the strange comparators of Kirkcaldy and Motherwell resulted in a difficult situation where the excess over guidelines at £9·6 million was reduced by agreement to £6·3 million.
To anyone following these matters carefully that would mean that the penalty would come down from £10·6 million to £3·6 million. That is a reasonable assumption, but, predictably, with this Government it turns out to be unsound. In fact, the penalty remains at £10·5 million and the gap of almost £7 million will have to be closed by borrowing during the year until the money that we all know will ultimately he repaid is repaid by Government. The result will be an additional charge, which in terms of interest rates will, I am told, be about £750,000. To me that is a Gilbertian situation that is impossible to defend. There is no real excuse for it.
The Minister knows that he will have to pay that money back. There was plenty of time because the adjustment that led to the diminution on the excess over guidelines was agreed on 18 June, yet the order was not laid until 24 July. I am advised that there is no legal impediment as that would have prevented the logical and sensible step of

calculating the penalties on the reduced excess over guidelines being followed. The outcome will be an additional burden on the ratepayer that is not needed. I am afraid that the reason is a rather vindictive approach to the particular problems of Edinburgh.

Mr. Ancram: I am grateful to the hon. Gentleman for giving way. This is an important point, and I am sure that he would wish to be fair. As he knows, penalties are drawn on budgets, and penalties that follow in the given financial year come from the budgets and can be readjusted on outturn if the expenditure is either lower or higher than that budgeted for. The hon. Gentleman is in effect making the case that Edinburgh, which set a very high budget because of the series of procedures, has now reduced its expenditure and, therefore, should attract a reduced penalty during this financial year. Would the hon. Gentleman be happy for Edinburgh to have that reduced penalty, in the knowledge that other authorities, such as Strathclyde, which may also make reductions in its expenditure during the current year, will have to suffer the same penalties as it suffers now that it will obtain the reduction only, as in Edinburgh's case, when the outturn is known?

Mr. Dewar: That is a very feeble argument. All my hon. Friends understand that there is a clear distinction to be drawn. Strathclyde may or may not make reductions, perforce, during the financial year, but we shall not know whether it does so until the outturn figures are known. We know that there has been a big reduction in Edinburgh. Both rates and expenditure have been adjusted, but that applied well before the order was laid.
If the Parliamentary Under-Secretary of State is asking me, triumphantly, whether I should be happy if Edinburgh were treated in this way and whether, by implication, that would be unfair to other authorities, the answer is that I should be happy if Edinburgh were treated in that way. I am sustained in that view by the fact that the Convention of Scottish Local Authorities unanimously—I stress and underline the word "unanimously", because it included all political groupings — backed Edinburgh on this point. Therefore, to pray in aid unfairness to other local authorities when they want the Minister to come into line with logic and reality seems to me to be very poor.
The Minister said that he has been able to be more generous than he was in 1985–86 regarding clawbacks. I suppose that the argument is that the robbery has been committed again but that the take is considerably smaller. That is very doubtful. The Minister will have seen COSLA's figures. The budgets, in volume terms, of three of the largest authorities have been taken for 1986–87 and the increase over 1985–86 has been calculated. The increase in penalty between 1985–86 and 1986–87 has then been examined.
In Glasgow's case, between 1985–86 and 1986–87 the budget, in volume terms, dropped by 2·7 per cent., but the penalty increased by 3·8 per cent. In Strathclyde, the budget, in volume terms, decreased by 2·5 per cent., but the penalty increased by 12 per cent. In Lothian there was an increase, in volume terms, but it was very modest— 0·3 per cent. However, the penalty increased by 190 per cent. That represents a very large vote of no confidence in the Minister's complacent defence. This is thoroughly unsatisfactory. The clawbacks are unnecessary, in the


circumstances, in that they are unsound in their methodology and unpredictable and capricious in their consequences.
I welcome the fact that the basis for the compilation of guidelines for 1987–88 has been changed. The basis will be the budgets for the previous year, plus an inflation rate of 3¾ per cent. We shall dispute whether that is an adequate percentage figure to apply. However, I welcome the fact that the previous year's budget is now being used as the basis for calculating the guidelines.
If the guidelines for 1987–88 are priced back to 1986–87, and if the abatement penalty in this order is then applied, one discovers that the total penalty to be paid is only £12 million, not £125 million. That puts into perspective some of the hysterical charges that are still being made in Government circles.
To put that proposition even more clearly and relevantly, we are in the quite extraordinary position that next year's guidelines will be based upon this year's budget, plus inflation. That is believed by the Minister to be a reasonable basis for next year's expenditure. However, the same base budget starting point for this year is attracting a massive penalty of £125 million. There is no conceivable explanation for that policy. The only difference is the addition of an inflation factor. Next year it will be completely acceptable, although this year it is believed to be financially irresponsible.
If one looks at the fine detail, is it not extraordinary that three of the 25 authorities that have been penalised have budgeted for expenditure in 1986–87 that is less than their assessed need? Much good it has done them, because at the end of the day they are to be penalised, together with the other authorities. It is an illogical, depressing but, I am afraid, an all too typical performance by this Government, and we shall certainly vote against the order tonight.

Sir Hector Monro: It is very nice that many Opposition Members have come tonight to listen to reality rather than to what we have heard in the past 20 minutes. I welcome the order.
Year by year, I have complained, but tonight I want to thank my hon. Friend the Minister and the Government. For ages I have felt that rural areas with a reputation for good housekeeping have been penalised by some obscure, incomprehensible formula. Tonight, at last, reality has prevailed and some of the figures that I shall mention are certainly welcome.
I find the observations of COSLA most unhelpful. It would be of benefit to local authorities if they tried to work a little harder with Government instead of trying to oppose everything root and branch. If COSLA showed a little leadership instead of a great deal of self interest, Scotland would benefit enormously from constructive advice. But all we get is pages of criticism in the document that they have sent us. With an attitude like that it is no wonder that nobody in Scotland wants an Assembly.
I wish to consider annex 2 of the guidelines. I am glad to note that Dumfries and Galloway has an 11·6 per cent. increase in its guideline. That is the highest increase in Scotland. Indeed, that is good news for southwest Scotland and a just reward for sensible finance over many years. The district councils within Dumfries and Galloway—

Mr. Donald Stewart: The hon. Gentleman is taking the same line as the Minister. He speaks as if this was just part of a balance sheet in a vacuum. What does he know of the effect that these cuts have had on the services to which people are entitled? Those services have been drastically reduced and, in some cases, completely destroyed. That is the other side of the legend.

Sir Hector Monro: The right hon. Gentleman must not exaggerate in his usual way. It is ridiculous to say that services have been completely destroyed because obviously they have not. I wish that he would realise that the root cause of most local authority problems is that they over-budget. Their budgets are high up in the clouds, and when they must reduce those budgets they talk of cuts. The budgets are merely being reduced back to reality.
The four district councils within Dumfries and Galloway have all had an increase of 9·5 per cent. which is the fifth highest in Scotland. That will, indeed, be most welcome. It shows that the formula is now weighted much more favourably towards authorities which have tried to keep within their guidelines and have not overspent in the past or planned to do so in future.

Mr. James Wallace: As I read the calculations, if one put next year's guideline for Nithsdale, for example, in real terms for the present financial year, Nithsdale would not incur a penalty. How can the hon. Gentleman justify Nithsdale incurring a penalty this year when on an equivalent level of expenditure next year it will not incur a penalty?

Sir Hector Monro: I am welcoming the fact that Nithsdale has an increase of 9·5 per cent. for the year. That is something which both the local authority and I welcome.
We are discussing budgeting tonight, and it is important to realise that, in real terms, local authorities are spending more now than in 1979. That shows that there has been a steady increase in expenditure in real terms. The hon. Member for Glasgow, Garscadden (Mr. Dewar) held up his hands in horror and said that Strathclyde could make no savings at all when it is £76 million over budget, which is incredible in local authority financing.
There is no more important issue than the serious position of education in relation to the teachers. We must try to resolve that as soon as possible. I was extremely disappointed at the attitude of the teaching profession and the view taken by the newspapers at the weekend. To say, as the Educational Institute of Scotland seemed to say, that Main is dead is absolute rubbish. It is a good report and we must use it as a basis for settlement.
Earlier this year, my right hon. Friend broke the log jam by setting up the Main committee to produce a report —something that the Opposition did not think possible. My right hon. Friend and the Main committee set a fine example to England, which will welcome the committee's recommendations as much as the House did.
So much seems to depend on the argument whether or not the package is indivisible, in the sense that pay and conditions of service must go together, as the Main committee recommended. I am firmly of the opinion that pay and conditions of service go together and are indivisible. If we are trying to find a solution, it is not so ludicrous to think that we can phase in pay and conditions of service. Surely we can rise above the nit-picking of the


EIS, which said that because it did not get the whole lot by 1 October it would not consider the Main committee recommendations.
The EIS did not like the conditions of service and jumped at the opportunity to reject the report. I trust that teachers and Opposition Members will look at the pay proposals carefully. My right hon. and learned Friend the Secretary of State for Scotland achieved the 16·4 per cent. from the Treasury recommended by Main—8·2 per cent. to be paid at the end of next month and 8·2 per cent. in October next year. That is on top of the 5·5 per cent. paid in April and the 9 per cent. in 1985–86. That is very nearly 30 per cent in less than three years. What other profession has been offered nearly 30 per cent. during the past three years, or even the past five years? The offer is worth the most careful consideration as it is an increase far above the rate of inflation and, importantly, an increase that recognises the worth of the profession, as recommended by Main. I certainly welcome the Main recommendations.
Sadly, the teachers seem to be in orbit about the phasing in of the award. May I remind Opposition Members about Clegg, which is often held up as the key to all educational advance? That was phased in in two stages. In 1984, the armed forces award of 7·6 per cent. was also phased in in two stages. In 1984, doctors and dentists achieved 6·9 per cent. — not the 16·4 per cent. recommended for teachers—and that was phased in in two stages. In 1985, nurses' pay was reviewed and the award phased in also. In 1984, the Top Salaries Review Body's recommendations were phased in.
Surely teachers could not have expected the 16·4 per cent. award to be paid on 1 October while they are working to rule or even on strike. Surely they should have been prepared to give much more consideration to the recommendations.
Hon. Members should look at what Main has offered by way of salary increases. As the hon. Member for Garscadden rightly said, such increases have a great deal to do with this order because the money has to come from the rate support grant. Under the proposals, the average salary of a primary school teacher will be £12,300. A secondary teacher will receive £13,745, and 60 per cent. of secondary school teachers will receive over £13,700. For head teachers it rises to £28,500. Those are significant increases and they should have been welcomed by the profession. Only 2 per cent. of teachers in Scotland would receive less than £8,000. We should bear in mind as well that 33 per cent. of all secondary teachers will have over £15,000. The teachers should not have turned down this settlement but should have given it much more careful thought than they have.
The huge sum which will come from taxpayers and ratepayers towards this settlement gives a wonderful chance to the profession to enter into a new era. The teaching profession desperately needs leadership from the EIS in an effort to find a solution. The EIS seems to have its head in the sand because it refuses to give leadership. It says it will depend on a ballot and will not give a firm indication of all the advantages available to the teaching profession in this recommendation.
I hope that teachers will read the reports of the debate and take on board what is on offer and pay less heed to what they have so often been told by the Opposition. Children and parents have gone through a miserable period. The future of our children depends on qualifications obtained at school and it is high time they

had an opportunity to reach their full potential. I hope that the EIS will come off the fence and will negotiate through the proper channels in an effort to resolve the dispute. The Secretary of State has played a brilliant and constructive part in reaching this point. It is now up to the teachers to come forward and reach a settlement.

Mr. James Wallace: I appreciate the need of the hon. Member for Dumfries (Sir H. Monro) to get something on record about the teachers' dispute so that it can be reported in next week's Dumfries and Galloway Standard and the Moffat News and Times. In so doing he went somewhat wider than the terms of the debate. I shall try to keep my remarks about that dispute within the terms of the debate. Today I met representatives from COSLA and discovered that there would be no scope for COSLA or for individual local authorities to reach a separate settlement. The Secretary of State assures me that the Government do not want that either and in that sense there seems to be some agreement.
COSLA is confused about the future of the rate support grant relative to the interim settlement that has already been agreed. I noted that the Under-Secretary of State did not give an immediate response when invited to do so and we look forward to hearing what he has to say on that point because that problem is greatly exercising the minds of local authorities.
In the report attached to this order there is a reference to 1985 orders Nos. 3 and 4. Presumably that means that Nos. 1 and 2 went before. A feature of the rate support grant is the system of penalties and guidelines that the Government operate in a fairly hard-line way. That means that time and again they have to come back to the House for topping-ups and taking-aways.
In introducing the order the Minister seemed like an early-day Santa Claus trying to pretend that he was giving £69 million back to local authorities for 1985–86. However, he was only giving back what he had taken away in one of these orders that we debated last year. In the interim period the local authorities that have lost that money have had to pay interest on it. With interest running at the rate of 10 to 11 per cent. I estimate that that represents a loss of £7·6 million to the ratepayers of the local authorities concerned. Because the system operates inflexibly, that is a loss to the ratepayers.
There is a suggestion that the guidelines are invested with some sort of magic. We are told that they are not intended to be mandatory, but because of the way in which the system works, they are, to all intents and purposes, just that. The Minister assures us that the total is one of those odd things, and is nothing to do with the sum of the parts. I have discussed with the Minister the individual guidelines for services with regard to the police allocation. He and I were in substantial agreement, but I was assured that that was not what that local authority was expected to spend on the police. Nevertheless, when everything was added up, the local authority had to stay within the total sum. Consequently, the individual parts bore no relation to the sum which would, nevertheless, be binding on the local authority.
It has been pointed out that if next year's guidelines were converted into real terms for the current year they would show a minimal overspend, resulting in a penalty of about £12 million rather than £125 million. Indeed, if the Edinburgh anomaly is taken into account, the penalty


would be £5 million instead of £125 million. The hon. Member for Dumfries did not pick up that point with regard to Nithsdale. This year it has no doubt been accused of irresponsible overspending in incurring penalty, despite the fact that the same spending next year would in real terms be the height of financial rectitude and would not incur penalty. Furthermore, this year it is incurring a penalty for spending a sum that does not even meet its assessed need on the Government's own estimate. The hon. Gentleman did not comment on that, although I gave him the opportunity to do so. I am sure that his electors will take due note of that.
Under this order, 25 local authorities are now to be penalised. We are not simply talking about penalising local authorities, because that burden will be passed on to the ratepayers, and will often affect the services provided by those authorities. The Government cannot raise the spectre of irresponsible, high-spending authorities for much longer. Three of the local authorities to be penalised tonight have an assessment of expenditure need — the Government's own assessment — that is greater than their guideline. Some authorities that spend the same in real terms next year will not be deemed irresponsible high spenders.
Reference has been made to the Lothian region, and the hon. Member for Glasgow, Garscadden (Mr. Dewar) pointed out that a Conservative administration had put forward a budget that incurred penalty. I am sorry that he did not also pick on the alliance. I would plead guilty as well, because it was a Conservative administration in alliance with the Liberals and Social Democrats that put forward that budget, because they did not feel that they could cut their expenditure any further. That shows that we are now reaching the bone. Most of the fat has been cut away, and the Government now expect local authorities to dig into the bone in order to meet their arbitrary spending guidelines.
The Government are obsessed with public expenditure. The Minister did the House a service by saying that he would not go into detail again on the Government's policy on public expenditure. We all know it well, but their obsession leads to rough justice, as is demonstrated by the order.

Mr. Tony Favell: I hope that the hon. Gentleman will forgive an Englishman for intervening in this debate—[Interruption.] Will the hon. Gentleman spare a word for the taxpayer who has to fund these feckless Scottish local authorities?

Mr. Wallace: With due respect, I forgive an Englishman many things, but we are no longer dealing with feckless and irresponsible local authorities. It has been admitted today that local authorities are now spending less in total volume terms than in 1978–79. Indeed, some of the local authorities penalised in the order are spending substantially less in volume terms than in 1978–79.
The guidelines reveal a lack of flexibility. The hon. Member for Garscadden has already mentioned the anomaly relating to Edinburgh, and so I shall not dwell on that. But I had thought that the Minister would argue that he could not have done anything about it for legal reasons.

I was astounded by his answer that there was no legal impediment, and that it was just another arbitrary decision.
There is a distinction between Edinburgh and other local authorities because Edinburgh's budget was agreed in plenty of time for fixing a penalty. Interest charges on that sum will have to be borne by Edinburgh's ratepayers.
The city of Aberdeen is an example of the Government's inflexibility because under the order it will suffer a penalty. Central Government lacked comprehension of what was going on and what was needed when oil was booming. The Government now lack sensitivity about Aberdeen's problems caused by the recession in the oil industry. Job losses are today running at a level which it was predicted would apply by the middle of next year.
Strains and pressures are put upon a local authority when it has to cope with a less buoyant economy. This is a time when one might expect to look to central Government for support, but instead such authorities are penalised further. That leads to cuts which result in even more job losses and a further spiralling down in economic activity.
The anomalies in the guideline system have been well illustrated in tonight's debate. I heave a sigh of relief that my constituency authorities are not to be singled out for penalties. However, the local authorities in my area know that their assessed needs are in excess of their guidelines.
The Minister assured us, as if it were something of which to be proud, that for no local authorities will the gap be any wider. That is not much consolation to local authorities who have been assured that there will be steady progress towards bridging the gap. Very little progress has been made for local authorities in my constituency. They have been prepared to put up with that, but I doubt whether they will be prepared to put up with it for much longer. Ratepayers and services will suffer.
It is incumbent upon any Government which replaces the present Government to restore the relationship between central Government and local government, so that central Government no longer dominates.
The Minister said that he wanted greater local accountability. As a principle, I would not disagree with that, but fundamentally I disagree with the ways in which the Government are going about achieving increased accountability. In social security legislation, the Government are trying to ensure that everyone pays, under the principle that there is no representation without taxation. Many people find that obnoxious.
The proportional representation system at local government level would ensure that local authorities are more representative of the people. That would be a more effective way of controlling expenditure at local level and of reflecting an area's needs. In that way local democracy can best be restored.

Mr. Michael Hirst: I regret the need to spend time this evening on discussing the order. I look forward to the day when we have reformed local government expenditure and when such orders are unnecessary. I certainly defend the Minister's action in bringing forward the order because history shows clearly that local authorities will overspend if they are not constrained by central Government. Tonight we are


discussing the latest action by central Government — action started by the Labour party and continued by the present Government.
The evidence is clear. When constraints and pressures are applied by central Government, local authorities are able to contain expenditure without services collapsing and without the great embarrassment about which we have heard so much from the Opposition.
The accusation about cuts in local government expenditure is without foundation. In spite of all that this Government have done over the past seven years, spending in volume terms is higher than it was in 1978–79.
The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to the pounding that local government in Scotland has received under the Government. If he had been in the House, I wonder what adjectives he would have used to describe the actions of the Labour Government when they made the most swingeing cuts in local government expenditure that there have ever been in the history of Scottish local government.
It would be fair to say that the policy which has been followed by my right hon. and learned Friend the Secretary of State and his predecessor has been a successful one.

Mr. Dennis Canavan: Tell that one to Strathkelvin district council.

Mr. Hirst: I shall come to that presently, if the hon. Gentleman can contain himself.
The scorn which the hon. Member for Garscadden poured on the policy pursued by the Government is simply not merited. Two years ago, when I was a comparatively new Member of the House, 15 authorities budgeted within guidelines. Last year there were 30, and this year there are 40—many of them controlled by the hon. Gentleman's party—which can start out with a budget that is within guidelines, and 11 authorities are just above guidelines.
When one looks at the provisional outturn for 1985–86, one sees that many of the authorities that budgeted to overspend last year managed to bring their spending back within guidelines. I do not know whether the hon. Member for Falkirk. West (Mr. Canavan) is listening, but I shall mention Strathkelvin. It budgeted to spend beyond guidelines last year and I am happy to say that it managed to bring its expenditure not just to guidelines but some thousands of pounds under them. In so doing it avoided any penalty being imposed upon the ratepayers.
I believe in giving credit where credit is due, and I give Strathkelvin credit for planning a budget this year which is only modestly above guidelines and much less of an over-budgeting exercise than was done the previous year.

Mr. Canavan: Before the hon. Gentleman entered this place, I had the privilege of representing part of Strathkelvin district. It is now Labour-controlled and all I hear from the people at the coalface of local government —the councillors—is that they are having to suffer the effects of the Government's cuts in local authority services, housing, and everything else. How on earth will the hon. Gentleman manage to explain that before he is out on his neck at the next general election?

Mr. Hirst: It is a pity that the hon. Gentleman has not been listening to the debate. If he chose to go back to his old stomping ground he would see that in the years since I became a Member a great deal more money is being spent

on that portion of West Stirlingshire than ever was spent when he was a Member there. [Interruption.] The hon. Gentleman's former constituents showed good sense in voting the way they did at the last election and I am sure that they will do so next time.
This year's guidelines are fair and reasonable. In percentage terms, they offer local authorities the opportunity of making an increase in real terms in what they can spend, and that is welcome. Moreover, the increasing number of local authorities that are budgeting within guidelines this year is confirmation of the success of my right hon. and learned Friend's policy.
Overshadowing all consideration of rate support grant must be the effect which there would be upon the pattern of spending by local authorities if the teachers accept the proposals that are on offer to them which were announced in the House by my right hon. and learned Friend last week.
I welcome the report which my hon. Friend the Minister gave of his discussions with COSLA. I was sorry that since I was not a fly on the wall I could not intervene in the interesting exchanges between the Secretary of State and the shadow spokesman on Scottish affairs. However, I know which version of events I would be prepared to believe.
I am heartened by the assurance that the Minister has given the House this evening that grant will be provided in full to meet the cost of the settlement which will fall to be borne in the 1986–87 financial year. I hope that teachers in Scottish schools will recognise that a fair and reasonable offer has been made to them when they consider it in the cool of their living rooms rather than in the heat of the staff rooms.
The House should recognise that since my right hon. and learned Friend has been Secretary of State for Scotland he has done a great deal to promote the interests of Scottish teachers and to promote peace, stability and progress in Scotland's schools. It is interesting that what we have heard from Opposition Members so far has fallen short of any recommendation that the terms that have been offered should be rejected. That is something that should be welcomed by all fair-minded Members irrespective of the side of the House on which they sit. Parents and the public generally, either as ratepayers or as taxpayers, will have to find the money to finance the deal. They will be right to expect that the teachers should accept a fair and reasonable offer.
It may sober many people to discover that two thirds of Scotland's teachers will have gross pay of over £1,000 a month. I regret to say that many of my constituents would give their eye teeth for that sort of pay. As my hon. Friend the Member for Dumfries (Sir H. Monro) said, when we consider what has been achieved for teachers' salaries over the past 30 months, it is clear that they have made progress. It is fair to say also that much more remains within their grasp.
I do not share the synthetic indignation that we have heard from some quarters about the so-called phasing of the pay increases that are part of the offer. I believe that the offer is fair and I am glad to have had the Minister's assurance that the Government will be meeting in full the costs of any of the impact of the settlement in the current financial year in terms of rate support grant.

Mr. David Lambie: I do not intend to take up the arguments of the hon. Member for Strathkelvin and Bearsden (Mr. Hirst) and for Dumfries (Sir H. Monro) on the teachers' dispute. I would say as a member of the Educational Institute of Scotland, and as secretary of the Westminster branch of the EIS, that I have always been brought up to believe that when gentlemen agree to go to arbitration to put their case for a pay review before an independent tribunal they should agree to accept the findings of the tribunal. There is no use appointing a referee and then saying, "We are not accepting your findings and we shall play the game again", when he does not award the goal to our side.
I say to the Secretary of State that he should pay the money to the teachers now. If he does so, I believe that the teachers will vote in the ballot to end the dispute. If he does not pay the money now, I believe that the teachers, by a majority, will vote for a continuation of the industrial dispute. The right hon. and learned Gentlman has won only half of the battle in the Cabinet. Let him return to the Cabinet and, along with his right hon. Friend the Secretary of State for Education and Science, win the second half. If he does that, we shall not have a continuation of the industrial dispute in the schools of Scotland and of England and Wales. Secretary of State, pay the money now and let us have a settlement.
I smiled when my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, "We have heard it all before." As a member of this place since 1970, I have heard it all before. Indeed, the speech that I am making now is one that I have made from time to time since 1970. There were occasions when I was not lucky enough to catch the eye of Mr. Speaker or Mr. Deputy Speaker, because in the past there has been more interest in these debates than there appears to be this evening. As a Member with a family local government background, I have always spoken and voted against the rate support grant settlement, and I shall be consistent this evening and take the same course. I have done so irrespective of the party in power.
I shall vote against the settlement with great fervour because this happens to be a Conservative Government. The Tories in Scotland are thin on the ground. In the House they are thinner on the ground. After the next election, they will be even thinner on the ground. But, although the Labour party won the debate in Scotland, and although we are winning the debate in the House, we will be defeated because the result of the Division will be determined by English Members of Parliament, especially those from the south of England, who are all Conservative Members. We see not democracy but a steamrollering of the power of English Tories from the south of England who dominate what is happening to local government in Scotland.
After the next election, if Scotland continues to have a predominantly Labour representation that is dominated by the Tory majority from the south of England, not only the Scottish people but the Labour party will need to examine the situation.
We are dealing with an order to reduce the rate support grant by £125·3 million—from £1,761 million to £1,636 million. Tomorrow the Chancellor of the Exchequer will make his autumn statement — [HON. MEMBERS: "Oh."] According to reports appearing in the various newspapers

today, he will say how well the country is doing and how we are going economically from strength to strength. He will not mention that the annual cost of unemployment is about £22 billion — £22 billion to pay people not to work. On average, that is £6,438 for each unemployed person. My district council of Cunninghame is penalised by more than £50,000. We have a cash excess over guidelines of just under £200,000 for 1986–87. But, worse still, in 1985–86, because of over-expenditure on unemployment in the area — an unemployment black spot—the council incurred an initial penalty of about £180,000. Because of that over-spending, we faced a grant penalty of 138 per cent. We now face a revised penalty of more than £400,000 in addition to the £50,000 for this year.
In my constituency of Cunninghame, South the September unemployment figure was 7,295 — 22·6 per cent. of the insured population. That figure was reached after 17 or 18 fiddles to determine the level of unemployment. In my constituency, the annual cost of unemployment is about £40 million—that is, it costs the Government £40 million to keep just over 7,000 people unemployed in my constituency. That is, on average, £1,553 for every working person in the constituency.

Mr. Gordon Wilson: What does that have to do with the order?

Mr. Lambie: We are discussing a cut in expenditure by local authorities at a time when the Government are prepared to increase expenditure on the unemployed. Local authorities such as mine — Cunninghame district council—spent about £10 million in 1985–86 and about £11 million in 1986–87. That money provides services and employment for the people of the area. The Government are saying to the district council "You are wasting money by spending £10 million or £11 million providing services and employment", yet the local authority is not saying to the Government, "You are prepared to spend £40 million in the constituency to pay people not to work."
Based on the 1986–87 budget, my regional council of Strathclyde has had a penalty of more than £76 million imposed on it. That can only mean a further cut in services and employment, increasing the numbers of the unemployed in Strathclyde. It means an increase in the amount that the Government are prepared to find to keep those people unemployed.
This is why I cannot understand the Government. They attack local councils which are providing services and employment—something that the Government are not prepared to do. I hope that the people of Scotland will recognise that, unless we get people back to work and get the £22 billion which is being wasted on unemployment money spent on building up the country and providing employment and services, we shall never get this country going again. I hope that the one or two decent Tories will vote for the Opposition and oppose the order.

Mr. Gavin Strang: I feel compelled to say a few words as an Edinburgh and Lothian Member of Parliament because it is important that we should support my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) in relation to Scotland as a whole and especially the position in Lothian and Edinburgh.
The penalty imposed on Lothian is severe and unjustified. It will destroy jobs and services on a scale that will be damaging to my constituents and, ironically, the constituents of the Under-Secretary of State for Scotland —the hon. Member for Edinburgh, South (Mr. Ancram) — and the Secretary of State. I must say in passing that I wonder whether the penalties applied to Lothian and Edinburgh have something to do with the feeling that they will be helpful electorally to the Government to try to save the three vulnerable Conservative seats and will force local authorities either to cut services and reduce jobs or to raise rates.
The Secretary of State said from a sedentary position — I am not sure whether it is in Hansard — that Edinburgh district council was making a donation to Robert Maxwell, or words to that effect. I say in passing again, because this is not central to the debate, that it would be a disgrace to Scotland if the Commonwealth games company were allowed to go into liquidation. I support Edinburgh district council in its efforts to avert that. I hope that the Government will not hold that against Edinburgh. I believe that, even at this stage, the Government should be prepared to look at the matter again and to avoid the damage to the companies that provided products for the Commonwealth games and the damage to Scotland's reputation and that of its capital city.
I hope that the Government will respond to a narrow point raised by my hon. Friend the Member for Garscadden about the penalty imposed on Edinburgh district council. That penalty relates to the excess over guidelines which would have prevailed had the district council not reached an agreement with the Secretary of State to reduce its expenditure. It must be unfair, by any test, that Edinburgh should be required to carry a £7 million penalty for an entire year. It must lose perhaps £500,000 on the interest payable on that sum.
I have two questions to which I hope the Government will respond. First, is it true that the Secretary of State has discretion in this matter and that there is no statutory requirement on the Government to penalise Edinburgh in that narrow respect? Secondly, if there is no statutory requirement on the Government to act in that way, will they at least agree to reconsider the matter?

10 11 pm

Mr. Ancram: I wish to comment briefly on some of the points made in the debate. I shall start by congratulating, as I always do on such occasions, the hon. Member for Cunninghame, South (Mr. Lambie) on giving his rate support grant speech its twice-yearly airing. We look forward to hearing it again in January when we debate the Main settlement order.
I also thank my hon. Friend the Member for Dumfries (Sir H. Monro) for his strong and helpful speech. I am grateful to him for welcoming the guidelines that have been issued to his regional authority. He and I have had some arguments about the way in which the formula worked in his authority, but this year he has seen that my prophecies of last year have been fulfilled. I listened carefully to his comments on the teachers. I hope that he will forgive me if I do not follow him down that road, but I agree with his comments on that matter. Opposition Members may not like the facts, as they showed while my hon. Friend was speaking, but it is only on the facts that sensible decisions can ultimately be reached.
The hon. Member for Orkney and Shetland (Mr. Wallace) raised several points. It is surprising to hear someone whom I always considered to be perspicacious say that local authorities cannot make savings in any area without cutting services. I am sure that if he considers his authority and other authorities across Scotland he will discover that savings can be made in some obvious areas where duplication takes place and where other ways of providing the same service to the same standard could be found.
The hon. Gentleman referred to Nithsdale, pleading on behalf of a small rural authority which is below its assessed need. Does he accept that the Government have a responsibility for the overall spending by local authorities in Scotland? If he accepted that, would he suggest that bigger increases should be given to small authorities al the expense of bigger authorities which have higher spending at the moment? That is the logic of his position, and I am sure that when he considers it he will discover that that would not be the case.
My hon. Friend the Member for Dumfries was accused by the hon. Member for Orkney and Shetland of not having considered Nithsdale's case. However, Nithsdale received a budget-to-guideline increase of 6·6 per cent. and a guideline-to-guideline increase of 9·5 per cent. this year. I am sure that Nithsdale will be grateful for the guidelines that have been given.
My hon. Friend the Member for Strathkelvin and Bearsden (Mr. Hirst) raised several points. I agree that it is ironic to hear accusations of reductions from Opposition Members. Certainly in terms of capital spending the Labour Government were the major reducers. The difference between this Government and the Labour Government was that we decided that, as a matter of policy and economic responsibility, it was important to keep public expenditure under control. They had to be forced into doing that by the International Monetary Fund because of the profligate spending that had gone before.
The hon. Member for Glasgow, Garscadden (Mr. Dewar) raised many points, one of which was also raised by the hon. Member for Edinburgh, East (Mr. Strang). Edinburgh knew precisely what it was doing when it budgeted in March this year. It knew that the penalties were imposed on the budgets struck in March and it knew what would happen if there was selective action and it was required to reduce its budget. Edinburgh knew all that because it had been through the procedure last year. There is no question of Edinburgh being able to say that it was surprised at the way in which the system operates. It would be wrong to tell one authority that it could have its penalty reduced because the Government made it reduce its expenditure and, at the same time, tell other authorities which are reducing their expenditure voluntarily that they must bear the whole penalty until the position is worked out at outturn. If we have a system, it must operate fairly. It is operating fairly in Edinburgh's case and I hope that the hon. Gentlemen will accept that.
The hon. Member for Garscadden also raised the question of Lothian region. The Conservative administration in Lothian region had an outstanding record. It restored Lothian from the financial shambles that Labour had left and reduced expenditure by 12 per cent. in volume terms while maintaining services. The remarkable thing is not so much that the administration was still budgeting over guidelines but that it achieved so much in bringing


expenditure under control within that period. It was certainly to the benefit of the ratepayers in my constituency and the constituency of my right hon. and learned Friend the Secretary of State.
I will not give the hon. Member for Garscadden a mathematics lesson. However, I am informed that there are four authorities responsible for the £107 million overspend. If the hon. Gentleman presses me I will take him through all the details. I am sure that he will find that on this occasion his mathematics are less accurate than mine. When the debate is over I shall let him know how those figures are made up.
I think that the hon. Member for Garscadden may have unintentionally misunderstood the basis of the guidelines. He suggested that the guidelines for 1987–88 were based on budgets plus 3·75 per cent. That is true globally, but individual guidelines are based on assessed need. The basis of the general settlement of the resources has enabled us to ensure, among other things, that every authority has a guideline increase of at least 3·75 per cent., a minimum of a freeze in real terms on guidelines. However, there are other guidelines which are increasing by considerably more than that amount.

Mr. Dick Douglas: On that point in relation to Fife, if one backdates the 1987–88 figure it would show Fife to have a current guideline of about £172 million. Fife is being penalised now to the tune of £3 million. However, it would be under the guidelines if one made the relevant adjustment. How can we, as public representatives, explain that bizarre arithmetic to the electorate?

Mr. Ancram: At this hour I am not going to take the hon. Gentleman through the complicated system of how the guidelines are drawn up. It was set out in the letter that was sent to the authorities. If the hon. Gentleman has any problem relating to the basis on which the guidelines for Fife were drawn I shall deal with that for him if he writes to me.
The hon. Member for Garscadden also raised the subject of the teachers. I indicated in my original remarks that we were willing to meet COSLA's request for a disregard in respect of the £27 million expenditure it estimates it will incur this year as a result of the interim pay award of April 1986, which is in excess of its budgeted provision. The hon. Gentleman asked what that meant. That disregard is being offered to COSLA on the understanding that both COSLA and the local authorities continue to work with us to persuade the teachers to avoid further disruption. That is something they are doing at the moment and we would expect all local authorities to be doing that in the future. I am sure that nobody, including Opposition Members, would wish to see further disruption in the classrooms.

Mr. Dewar: The Minister has opened up an important point. He has not clarified the issue, but seems to have clouded it. May I try to understand what I have just been told? First, the £27 million will be disregarded for guidelines purposes, in exactly the same way as it would have been if a settlement of the teachers' dispute had been achieved. Secondly, he has put in the caveat that that is conditional on the authorities continuing to co-operate with the Government, as—he ended by saying—they are

doing at the moment. In other words, he is satisfied with the policy that they are following at the moment. He is not looking for anything else. He is not setting any other bench-marks against which to apply a test before agreeing to that disregard.

Mr. Ancram: I accept that definition. I said that so long as local authorities and COSLA continue to try to persuade the teachers not to return to disruption in the classroom, which they are doing at the moment, because it is in nobody's interests to return to disruption in the classroom, the disregard will be payable. As far as I am concerned, that situation exists at the moment, and as long as it continues, the disregard will be payable.

Mr. Wallace: Will the hon. Gentleman give way?

Mr. Ancram: I have said what I have to say on that, and I hope that hon. Members—

Mr. Wallace: rose—

Mr. Ancram: —will accept that I am saying that at the moment authorities are, in our view, taking the correct approach to future disruption in schools. On that basis, if they continue to do that, the disregard will be payable when it is appropriate so to do.

Mr. Wallace: I seek further detailed clarification. If it should transpire that some local authorities do not match up to what the Government would expect of them, will the Government discriminate between different local authorities in the disregard, depending on what attitude they strike?

Mr. Ancram: The hon. Gentleman is now beginning to hypothesise. [HON. MEMBERS: "No."] I said that at the moment authorities — and I hope that Opposition Members take the same view—are concerned to see no resumption of disturbances and industrial problems in the classroom. I hope that Opposition Members will continue to press local authorities to do the same. Local authorities are doing that at the moment and on that basis the disregard would be paid.

Mr. Dewar: rose—

Mr. Ancram: I have said what I have to say, and the hon. Gentleman must allow me to finish my speech.
The final accusation made by the hon. Member for Garscadden and others was that there was something wrong with the principle of reducing rate support grant to control local authority spending. The hon. Member for Orkney and Shetland made the same point. I say again to the hon. Member for Garscadden that that was not invented by this Government. I was looking at the report on the Rate Support Grant (Scotland) Order 1976, and I read that the Secretary of State, who I understand to have been the right hon. Member for Glasgow, Govan (Mr. Millan),
has informed local authorities that the amount of grant in the increase order will be reduced by £5 million below what it would otherwise have been. This action has been taken because local authority budget estimates for 1976–77 were still some £45 million in excess of the level assumed by Government in fixing the rate support grant for 1976–77, despite exhortations by the Secretary of State to local authorities to reduce current expenditure in the national interest.
That was the Labour party's view then. The principle is the same today. The system is fairer. On that basis, I ask the House to support the order.

Question put:—

The House divided: Ayes 178, Noes 97.

Division No. 309]
[10.23 pm


AYES


Aitken, Jonathan
Heddle, John


Alexander, Richard
Hickmet, Richard


Alison, Rt Hon Michael
Hirst, Michael


Amess, David
Hogg, Hon Douglas (Gr'th'm)


Ancram, Michael
Holland, Sir Philip (Gedling)


Ashby, David
Holt, Richard


Atkins, Robert (South Ribble)
Howarth, Alan (Stratf'd-on-A)


Atkinson, David (B'm'th E)
Howarth, Gerald (Cannock)


Baker, Nicholas (Dorset N)
Hubbard-Miles, Peter


Beaumont-Dark, Anthony
Hunt, David (Wirral W)


Bellingham, Henry
Hunt, John (Ravensbourne)


Bendall, Vivian
Hunter, Andrew


Bevan, David Gilroy
Jessel, Toby


Blackburn, John
Johnson Smith, Sir Geoffrey


Bonsor, Sir Nicholas
Jones, Gwilym (Cardiff N)


Boscawen, Hon Robert
Jones, Robert (Herts W)


Bottomley, Mrs Virginia
Kellett-Bowman, Mrs Elaine


Bright, Graham
Kershaw, Sir Anthony


Brinton, Tim
Key, Robert


Brooke, Hon Peter
Knight, Greg (Derby N)


Brown, M. (Brigg &amp; Cl'thpes)
Knight, Dame Jill (Edgbaston)


Bruinvels, Peter
Knox, David


Bryan, Sir Paul
Lang, Ian


Buchanan-Smith, Rt Hon A.
Latham, Michael


Budgen, Nick
Lawrence, Ivan


Butler, Rt Hon Sir Adam
Lee, John (Pendle)


Butterfill, John
Lennox-Boyd, Hon Mark


Carlisle, John (Luton N)
Lloyd, Peter (Fareham)


Carlisle, Kenneth (Lincoln)
Lord, Michael


Carttiss, Michael
Macfarlane, Neil


Cash, William
Maclean, David John


Chalker, Mrs Lynda
McQuarrie, Albert


Chapman, Sydney
Madel, David


Chope, Christopher
Major, John


Clark, Dr Michael (Rochford)
Maude, Hon Francis


Clarke, Rt Hon K. (Rushcliffe)
Morrison, Hon C. (Devizes)


Colvin, Michael
Moynihan, Hon C.


Conway, Derek
Neale, Gerrard


Coombs, Simon
Neubert, Michael


Cope, John
Newton, Tony


Couchman, James
Nicholls, Patrick


Currie, Mrs Edwina
Parkinson, Rt Hon Cecil


Dorrell, Stephen
Pollock, Alexander


Douglas-Hamilton, Lord J.
Portillo, Michael


Dover, Den
Powley, John


Dunn, Robert
Rhodes James, Robert


Durant, Tony
Rhys Williams, Sir Brandon


Dykes, Hugh
Rifkind, Rt Hon Malcolm


Edwards, Rt Hon N. (P'broke)
Roberts, Wyn (Conwy)


Evennett, David
Robinson, Mark (N'port W)


Eyre. Sir Reginald
Roe, Mrs Marion


Fallon, Michael
Rowe, Andrew


Favell, Anthony
Ryder, Richard


Fenner, Mrs Peggy
Sackville, Hon Thomas


Finsberg, Sir Geoffrey
Sainsbury, Hon Timothy


Fletcher, Alexander
Sayeed, Jonathan


Forman, Nigel
Shaw, Giles (Pudsey)


Forsyth, Michael (Stirling)
Shaw, Sir Michael (Scarb')


Forth, Eric
Shelton, William (Streatham)


Fox, Sir Marcus
Shepherd, Colin (Hereford)


Franks, Cecil
Silvester, Fred


Fraser, Peter (Angus East)
Sims, Roger


Freeman, Roger
Skeet, Sir Trevor


Gale, Roger
Soames, Hon Nicholas


Galley, Roy
Speed, Keith


Garel-Jones, Tristan
Spencer, Derek


Griffiths, Peter (Portsm'th N)
Spicer, Jim (Dorset W)


Ground, Patrick
Spicer, Michael (S Worcs)


Hamilton, Hon A. (Epsom)
Stanbrook, Ivor


Hamilton, Neil (Tatton)
Stern, Michael


Hampson, Dr Keith
Stewart, Andrew (Sherwood)


Hanley, Jeremy
Stradling Thomas, Sir John


Hargreaves, Kenneth
Taylor, John (Solihull)


Harris, David
Taylor, Teddy (S'end E)


Harvey, Robert
Temple-Morris, Peter


Haselhurst, Alan
Thompson, Donald (Calder V)


Hayward, Robert
Thompson, Patrick (N'ich N)


Heathcoat-Amory, David
Thorne, Neil (Ilford S)





Thurnham, Peter
Wells, Sir John (Maidstone)


Townend, John (Bridlington)
Wheeler, John


Tracey, Richard
Whitfield, John


Twinn, Dr Ian
Whitney, Raymond


van Straubenzee, Sir W.
Wilkinson, John


Waddington, David
Winterton, Nicholas


Wakeham, Rt Hon John
Wood, Timothy


Waldegrave, Hon William
Woodcock, Michael


Walden, George
Yeo, Tim


Waller, Gary



Ward, John
Tellers for the Ayes:


Warren, Kenneth
Mr. Gerald Malone and


Watts, John
Mr. David Lightbown.


NOES


Anderson, Donald
Hughes, Simon (Southwark)


Atkinson, N. (Tottenham)
John, Brynmor


Barnett, Guy
Kaufman, Rt Hon Gerald


Beckett, Mrs Margaret
Kirkwood, Archy


Bermingham, Gerald
Lambie, David


Bray, Dr Jeremy
Lamond, James


Brown, Gordon (D'f'mline E)
Leadbitter, Ted


Brown, N. (N'c'tle-u-Tyne E)
Lewis, Ron (Carlisle)


Brown, R. (N'c'tle-u-Tyne N)
Lofthouse, Geoffrey


Brown, Ron (E'burgh, Leith)
Loyden, Edward


Buchan, Norman
MacKenzie, Rt Hon Gregor


Caborn, Richard
McWilliam, John


Callaghan, Jim (Heyw'd &amp; M)
Madden, Max


Campbell-Savours, Dale
Marek, Dr John


Canavan, Dennis
Marshall, David (Shettleston)


Carlile, Alexander (Montg'y)
Martin, Michael


Clark, Dr David (S Shields)
Maxton, John


Clarke, Thomas
Maynard, Miss Joan


Clay, Robert
Michie, William


Clelland, David Gordon
Millan, Rt Hon Bruce


Cocks, Rt Hon M. (Bristol S)
Nellist, David


Cook, Robin F. (Livingston)
O'Brien, William


Corbett, Robin
Park, George


Corbyn, Jeremy
Patchett, Terry


Cox, Thomas (Tooting)
Penhaligon, David


Craigen, J. M.
Powell, Raymond (Ogmore)


Crowther, Stan
Randall, Stuart


Cunliffe, Lawrence
Raynsford, Nick


Davis, Terry (B'ham, H'ge H'I)
Redmond, Martin


Deakins, Eric
Robertson, George


Dewar, Donald
Ross, Ernest (Dundee W)


Dixon, Donald
Rowlands, Ted


Dormand, Jack
Shields, Mrs Elizabeth


Douglas, Dick
Skinner, Dennis


Dubs, Alfred
Smith, c. [Isl'ton S &amp; F'bury)


Duffy, A. E. P.
Spearing, Nigel


Eadie, Alex
Steel, Rt Hon David


Eastham, Ken
Stewart, Rt Hon D. (W Isles)


Fields, T. (L'pool Broad Gn)
Strang, Gavin


Fisher, Mark
Thompson, J. (Wansbeck)


Forrester, John
Wallace, James


Foster, Derek
Wardell, Gareth (Gower)


Freud, Clement
Wareing, Robert


Godman, Dr Norman
Welsh, Michael


Gourlay, Harry
Wigley, Dafydd


Hamilton, W. W. (Fife Central)
Wilson, Gordon


Hardy, Peter



Hogg, N. (C'nauld &amp; Kilsyth)
Tellers for the Noes:


Home Robertson, John
Mr. Allen Adams and


Howells, Geraint
Mr. James Hamilton.


Hoyle, Douglas

Question accordingly agreed to.

Resolved,
That the Rate Support Grant (Scotland) Order 1986, dated 22nd July 1986, a copy of which was laid before this House on 24th July, be approved.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &c.)

NORTHERN IRELAND

That the draft Rates (Amendment) (Northern Ireland) Order 1986, which was laid before this House on 21st July, be approved.
That the draft Financial Provisions (Northern Ireland) Order 1986, which was laid before this House on 21st July, be approved.

HIGHLANDS AND ISLANDS

That the Highlands and Islands Development Board Area Extension Order 1986, dated 9th October 1986, a copy of which was laid before this House on 21st October, be approved.

CUSTOMS AND EXCISE

That the Customs Duties (ECSC) (No. 2) (Amendment No. 4) Order 1986 (S.I., 1986, No. 1352), dated 31st July 1986, a copy of which was laid before this House on 1st August, be approved.

INTERNATIONAL IMMUNITIES AND PRIVILEGES

That the draft International Fund for Ireland (Immunities and Privileges) Order 1986, which was laid before this House on 27th October, be approved.—[Mr. Maude.]

Question agreed to.

Food and Animal Health

Motion made, and Question proposed,
That this House takes note of European Community Documents Nos. 9453/83 on intra-Community trade in bovine and pig semen, 11403/85 on intra-Community trade in meat products, 6364/86, 6365/86, 6366/86 and 6367/86 concerning draft proposals for a new approach to harmonisation in the field of foodstuffs, and of the Ministry of Agriculture, Fisheries and Food's unnumbered explanatory memorandum of 9th July 1986 on food flavourings; and of the Government's intention to pursue agreement to a procedure within the framework Directives which ensures that the interests of Member States are respected in subsequent Commission proposals.—[Mr. Maude.]

Mr. Teddy Taylor: On a point of order Mr. Deputy Speaker. I apologise for not giving you notice of my point of order, but is the House competent to decide this measure under Standing Order No. 80(5)?
This is rather a dramatic constitutional measure because it provides the Commission with the power to make regulations without the approval of the Council of Ministers. It takes this power under the provisions of the Single European Act which becomes the law of the land under the European Communities Bill. But that Bill is not yet the law of this land. Could consideration be given over the next few days to whether it is competent for the House to consider an important constitutional measure of this nature under Standing Order No. 80(5) when the powers are derived from the European Communities Bill and the Single European Act, which is not yet the law of this land?
Paragraph 9 of document 6365/86 which is attached to the directive sets the matter out clearly. The document is signed by Lord Belstead. Over the next few days could consideration be given to whether it is lawful for this measure to be considered now when the additional powers being given to the Commission are in a Bill which has not yet received Royal Assent?

Mr. Deputy Speaker (Mr. Harold Walker): I am assured that the correct procedures have been followed in relation to the order and that it would be proper for me to put the matter to the House.
Question put forthwith, pursuant to Standing Order No. 80 (Standing Committees on European Community documents), and agreed to.

Unemployment (Jarrow)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Maude.]

Mr. Don Dixon: I am grateful for the opportunity of the Adjournment debate this evening because this is the 50th anniversary of the Jarrow march. I was born and educated at an elementary school within 200 yards of where that march started.
When those 200 proud men marched from Jarrow they did so, not for an extra bowl of soup or an extra crust of bread, but for the right to work and the dignity of a pay packet rather than the indignity of the means test which prevailed in Jarrow at that time. I can recall those days and the hardships that my parents faced. In those days Jarrow, where poverty was prevalent, was referred to as the workhouse without walls. I have always been proud of the men who took part in the march and of the dignified way in which they conducted themselves.
On 5 October 1986, when the 1986 march was about to leave Jarrow, I spoke to those who were taking part and reminded them of their responsibility, not only to themselves, but to the memory of that procession and to the 4 million unemployed today on whose behalf they were marching.
I want to put it on the record that I am equally proud of those who took part in the 1986 Jarrow march which finished this week and the dignified way in which they conducted themselves, in spite of provocation by certain individuals who should know better. The marchers were referred to as barbarians. It is not what is on a person's head that counts but what is in that person's head. The only barbarians that I can see are in government, who preside over 4 million of our fellow citizens on the dole — that human scrap heap. When Ministers offer to spend a week on the dole to prove that they can suffer the same as anyone else, I remind hon. Members that I spent six months on the dole in Jarrow and I know what it is about. It really annoys me when Ministers come forward with their little gimmicks suggesting that they can spend a week on the dole to prove that the dole is easy.
The 1986 Jarrow marchers have been a credit to all those whom they represented, to the memory of the 1936 crusade and the 4 million unemployed. I would like to put on record my sincere thanks to 10 of my constituents and the others who took part. For the record, I would like to mention my constituents by name: John Badger, Harry Thorn, Lawrence Maloy, Billy Orr, David Melia, Paul Laft, Paul Thomas, Steven Byrne, Wayne Scott and Ken Smith. I would like to pay a special tribute to Simon Osborne and Richard Hasswell, the two lads from Leeds who organised the 1986 Jarrow march.
Some people have said that the 1936 Jarrow march was not political, and the march of 1986 was. The 1936 march was organised by a Labour-controlled council. Four Labour aldermen led the march—David Riley, Paddy Scullion, Jock Hanlon and Joe Symons who later became a Member of this House. There were Tory marchers and the Tory agent at the time marched along. If any Tories had wanted to take part in the 1986 march they would have been welcome. None of the 1986 marchers were vetted for their politics. They were only vetted to ensure that they were out of work and entitled to go on the march. I have no doubt that the marchers would have welcomed


one or two Tory ex-Cabinet Ministers who shed crocodile tears every time there was a debate on unemployment in the Chamber.
I vividly recall the 1936 march. As a small boy of seven, I saw the marchers leave the town hall. I can recall asking my father why the men were marching. He replied that they were going to London to find work. I asked an innocent boy's question: "Would it not be easier to fetch the work up here where the men are?" That same question could be asked today—50 years later.
Last night I presented a petition on behalf of thousands of people in my constituency. Little did I realise, as I watched the Jarrow marchers leave in 1936, that I would present a petition about unemployment in Jarrow. There is intolerably high unemployment in my constituency, like many other constituencies in the north, the north-west, Wales and Scotland. Our areas are being turned into industrial deserts by the Government's policies. The Government have cut regional aid. Regional aid is not a charity. We do not want charity in our regions. Regional aid is a right. Central Government are obliged to ensure that the regions are cared for. Instead of cutting regional aid, the Government should be increasing it.
My constituency has been devastated by the Government's policies. Unemployment has doubled in my constituency since 1979, when the Government were elected. It has increased from 3,600 to over 8,000. That is the Ministry's massaged figure. The unemployment unit's figure is more than 9,000. According to the Ministry's calculations, it costs more than £6,000 to keep a person on the dole. It costs the Government £51 million a year to keep the people of Jarrow unemployed— yet they talk about cutting public expenditure.
Long-term unemployment has increased fourfold, from 900 to 3,600. I recently received a letter from a constituent, who said:
I am still unemployed after six years and I have filled in thousands of application forms and been on hundreds of interviews for jobs without success. It is slowly driving me around the bend, and I am under the doctor receiving treatment for severe depression … You see, Sir, the unemployed have no one to fight for them. I feel isolated and a cast-out, so they (DHSS etc.) can do what they like with them, and I think it's a disgrace, in this present day and age, if they get away with it. I realise you will be very busy etc. but myself and other unemployed rely on someone important to help or we will all be crushed into the earth.
That man is genuinely unemployed—he is not trying it for one week, then returning to a plush job and a big house. He has written for hundreds of jobs, had many interviews, but is still unemployed.
Under-25 unemployment has risen sixfold from 500 to more than 2,900. As I have said before, I have been unemployed on numerous occasions. It was no consolation when standing in the dole queue for someone to tap me on the shoulder and say, "You are all right this week Don, you are only one of 17 per cent.—last week you were one of 18 per cent." When someone is unemployed, he is 100 per cent. unemployed when there are no jobs available.
Since 1979 there has been not simply a loss of jobs in my constituency, but a haemorrhage. Swan's Hebburn shipyards of Hawthorn Leslies and Palmers in 1979 employed almost 3,000 people; today they employ five on maintenance work at Palmers. Hawthorn Leslies has closed. The Mercantile Dry Dock used to employ 305 men,

but has now closed; the British Steel Corporation used to employ 306 men, but has closed; Boldon pit used to employ 900 men, but has closed; British Steel Brickworks used to employ 117, but has closed. Reyrolles employed 4,261 but now employs only 985. The list is endless.
This Government have done what Hitler's bombers failed to do during the war—they have stopped industry in Jarrow. It is a shipbuilding community and, like mining communities, is closely knit. Yards have been closed without regard to the social consequences. The march in 1936 was because of Shipbuilding Securities Limited, an organisation of merchant bankers, shipbuilders and shipowners who, because of over-capacity in the industry, decided to buy the yards and close them. The same thing was done by Graham Day, the past chairman of British Shipbuilders, at the behest of the Government.
For the first time in living history there is no shipbuilding on the south side of the river Tyne. To add insult to injury, a modern prefabricated shed built in Palmers and equipped by British Shipbuilders is now being used to store surplus grain. Instead of building ships to take the grain to the starving millions in Africa, we are storing grain. That is the obscenity of this Government.
Local authorities, the largest employers in our area, have had their rate support grant slashed by the Government. When the right hon. Member for Chingford (Mr. Tebbit), the chairman of the Tory party, insults the unemployed by telling them to get on their bikes, he forgets that those who get on their bikes are the young men. When they move out of their areas they do not take with them the old people's homes, the parks, the libraries or the community centres. They have to be paid for by those left behind. With the Government slashing rate support grant, that is an extra burden. My local authority has lost millions of pounds in rate support grant.
I want to point out similarities with the 1930s. When the Jarrow march took place in 1936, when seven out of 10 men were out of work, a charity fund was set up by Sir John Jarvis, the High Sheriff of Surrey. They used the fund to build a park in Jarrow. To get a month's employment in the park a man had to have been out of work for three years.
Today's similarity to that is the community programme, where someone has to be out of work for 15 months before he can get another job. Shipbuilding Securities Ltd., closed down Jarrow's shipyards and put a 40-year embargo on the building of ships. Tyne Ship Repairers is selling its Middle Dock at South Shields, and one of the conditions of the sale is that no one must repair ships in that dock. That is another of today's similarities to the 1930s.
Jarrow is a proud town with proud people. We are proud of our town and do not suggest in any way that we want charity. All that the people in Jarrow want is the right to work. We do not expect the Government to come along with a magic wand that will cure unemployment overnight. There are some ways in which the Government can help. For example, they could allow the local authority to spend the money it has raised from the sale of council houses. It sold 4,300 council houses last year and there are 7,200 applicants on the waiting list. Last year the council built 25 houses and this year it will build 46. According to my calculations it will take 276 years for the people on the waiting list to be rehoused in new houses — unless the Government allow the council to build houses using the money raised from the sale of houses.
The Government could announce a programme for refurbishment and replacement of power stations. That would help NEI-Reyrolle. A decade ago that company employed 12,000 men. Now it employes under 1,000. Unless we get some sort of power station programme there will be no power industry left in Britain.
The Minister knows a bit about defence because he has just been switched from defence procurement. The Government could bring forward the orders for the type 23 frigates and the AOR 2 and that would help the shipbuilding workers. They could give back to the local authority the £9·5 million of rate support grant that they stole from it. They could let the Manpower Services Commission open new training centres in Jarrow instead of closing them at Killingworth and in other parts of the country.
Unless the Government do something about the scourge of unemployment, I shudder to think what the consequences will be. I warn the Minister and the Government that today's youngsters are not so deeply steeped in democracy that they will accept the solutions of the 1930s to the problems of the 1980s. The sooner the Government get that through their heads the better.
The first opportunity to go to the polls after the Jarrow crusade of 1936 was in 1945, when a Labour Government were swept in with an overwhelming majority. It is to be hoped, after the 1986 march, when we go to the polls next year or the year after, that the people will do the same as in 1945. Walter Runciman, the then President of the Board of Trade, told the Jarrow marchers when they went to see him in the 1930s that they should go back to Jarrow and work out their own salvation. We have done our best because at every local and national election since then we have retained Labour candidates. I hope that the country will take an example from Jarrow and will work out the salvation of Britain by making sure that they return a Labour Government at the next general election.

The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): I sincerely congratulate the hon. Member for Jarrow (Mr. Dixon) on having secured this Adjournment debate. I much appreciate his concern and deep commitment to the problems of the unemployed in Jarrow. From my previous ministerial involvement at the Ministry of Defence I particularly acknowledge his efforts to generate naval orders for the north-east yards.
I fully accept the seriousness of the situation in Jarrow. It is no coincidence that this debate marks the 15th anniversary of the Jarrow march. In 1936, as now, the people of Jarrow marched, they said, to make the Government face up to their duty to Jarrow and to other areas of high unemployment. The hon. Gentleman's well-respected predecessor, Ellen Wilkinson, wrote in 1936 that the Government of the day should not be given a chance to:
get out of the awkward situation in which events like the Jarrow march and its nationwide publicity have placed them.
I suspect that the hon. Gentleman feels such sentiments are still appropriate today, and I know that unemployed people from Jarrow and elsewhere yesterday presented a petition to the House urging help for unemployment blackspots. However, the hon. Gentleman does not need me to tell him that unemployment is not just a matter for local or even national concern: it is an international problem. Indeed, 16 million people are unemployed today

in the EEC. We are constantly searching for ways to help industry and commerce create new jobs, and we are also conscious of the need to help the unemployed of this country.
However, it is an indisputable fact that the number of jobs nationally has been rising; over 1 million new jobs, admittedly many of them part-time, have been created since March 1983. Self-employment rose by 550,000 in the four years to June 1986. A total of 65 per cent. of the United Kingdom population is in work — higher than any of our European partners. The number of employees in the service sector is at a record level and the rate of decline in the number of manufacturing jobs has eased considerably since 1983.
Unfortunately this is of no immediate comfort to those living in the unemployment blackspots. I shall refer later to existing Government aid for these areas, but first I shall concentrate on Jarrow.
I can assure the hon. Member that the Government of today do not regard the plight of Jarrow merely as an "awkward situation". Areas like Jarrow cannot, and will not, be swept under the carpet and forgotten.
Tragically, Jarrow and south Tyneside have a long history of high unemployment, to which the hon. Gentleman referred, while unemployment nationally has been rising for the past 20 years. Tyneside has been the victim of industrial blight throughout this century. Indeed, as the hon. Member will be aware, south Tyneside travel-to-work area has the highest unemployment rate in Great Britain and, like the hon. Gentleman, I regard 26 per cent. unemployment as far too high.
Jarrow, like too much of the north-east, suffers from an all too familiar problem. It has depended on traditional, labour intensive industries—like shipbuilding and heavy engineering—which have found it difficult to adapt to a changing world market. While there have been welcome improvements in recent years, I think that it must be accepted that, historically, poor management, low capital investment and demarcation disputes have taken their toll.
There needs to be a fundamental change from the old industrial pattern to new technologies, but these changes are invariably painful and lengthy processes.
Sadly, there have been a large number of redundancies and closures in the area. But I believe that it is a mistake which does no service to south Tyneside to paint a picture of unrelieved gloom.
Let me now turn to the range of Government initiatives and measures that are available. First, I shall deal with what I would term national schemes. During this year, we have introduced the restart programme, the new workers scheme, and the pilot job training scheme, expanding YTS into a two-year programme, extending the community programme, the enterprise allowance scheme, and the jobclub programme. What we want is to be able to offer all unemployed people, whatever their skills or experience, something which will improve their chances of finding a permanent job.
In all, some 15,000 people in south Tyneside, Sunderland and Gateshead are benefiting from measures administered by my Department. This Government are, in overall terms, spending £3 billion nationally on employment, enterprise and training measures.
The expansion of YTS into a two-year vocational programme is a major step towards ensuring that every young person under 18 is either receiving high-quality training, or is in work or full-time education.
Nearly 7,000 young people in the south Tyne area are currently on YTS schemes and I believe that participation in YTS extends young people's perceptions of the opportunities open to them. It is a first step towards breaking the belief that there is no life outside the traditional industries.
Help for young people who have either exhausted their YTS entitlement or are too old for YTS is available through the new workers scheme which we introduced earlier this year. This scheme aims to assist jobseekers under 21 by providing financial assistance to employers who engage young people at rates of pay which reflect their relative inexperience. Another group which suffers disproportionately is the long-term unemployed.
The community programme — one of our major schemes to help the long-term unemployed—is currently providing temporary work on projects of benefit to local communities to over 7,000 people in the south Tyne area.
The restart programme, introduced earlier this year, offers a wide range of ways back into work to those who have been unemployed for a year or more. To date, nearly 3,000 people in Jarrow and South Shields have received in-depth counselling interviews from jobcentre staff.
One of the several options which the programme offers is a one or two-week restart course. About 600 people have been put forward for these courses, which help people assess their abilities and improve their job-hunting techniques.
Last month we announced the testing of a new restart programme for the six-month unemployed. Pilots will show whether we should extend restart nationally. Another initiative, which we extended nationally earlier this year, are job clubs to help long-term unemployed people help themselves in their search for work. Early results from job clubs are highly encouraging—two out of three people leaving them go into jobs—and we aim to provide 1,000 job clubs nationally by March 1987.
I understand that Jarrow job club opened on 6 October, and wish its members every success.
These measures are available throughout the country, but we recognise that some areas have particular problems towards which aid needs to be specifically targeted.
Jarrow, and unemployment blackspots throughout the country, need additional help to overcome their economic problems. South Tyneside is, quite rightly, a development area attracting the highest levels of regional aid. Since May 1979 the area has received some £50 million in regional selective assistance and regional development grants. This money has helped create some 1,600 new jobs and safeguard 11,000 existing ones.
However we ourselves cannot create the jobs that Jarrow and south Tyneside need, but through regional aid, we can, and do, help those areas attract the investment which can create new jobs.
Another problem which needs similarly-directed assistance is that of urban deterioration. Our Inner-city policy addresses itself to solving that problem by directing resources towards inner city areas suffering from a poor environment and a high degree of social need.
Through our urban programme we have allocated nearly £4 million this year to south Tyneside borough. This money will be spent on projects of social, environmental and economic value to the community, and

more resources are available under the urban housing renewal unit's community refurbishment schemes and the urban development grant scheme.
South Tyneside also benefits from measures which offer advice and aid to shipbuilding workers facing redundancy in order to help them obtain new jobs, retrain or start their own businesses. We have given the Manpower Services Commission £1 million to retrain redundant British Shipbuilders' workers, and have allocated £5 million to set up British Shipbuilders (Enterprise) Ltd.
The Secretary of State for the Environment announced in October a new urban development corporation to be set up in Tyne and Wear. This urban development corporation will be able to spend over £100 million on Derelict land reclamation and the provision of infrastructure which will open up sites for private sector industry and housing development, It will complement the activities of the northern development company, English Industrial Estates, and Government Departments in the area.
We must not forget that, despite the difficult times, contracts are being won and new jobs are being created in Jarrow. For example, Tyne Shiprepair of Wallsend has won a contract worth nearly £750,000 for vessel refurbishment from the Ministry of Defence, and Interconnection Systems is creating 150 jobs in South Shields to manufacture printed circuit boards. We should not forget that Nissan UK—while not within the south Tyneside travel to work area—is creating 2,200 new jobs over the next few years which will be accessible to Jarrow residents.
Indeed, nearly 2,000 people have been placed in work by the public employment service alone since April, and many more will have found jobs by other means.
So far, I have concentrated on measures to help the unemployed become employees. But there is another side to the coin. Earlier, I briefly mentioned the increase in self employment. Sixty per cent. more people were self employed in the north east in 1985 than in 1969. New business registrations were running at some 6,500 in 1985 compared with 5,800 in 1980. This is a start but the north east is none the less relatively deficient in terms of an active independent small firms sector.
We are convinced that a strong small firms sector is essential to our economy. We need small firms to develop all over the country as the innovators, employers, suppliers and wealth creators of the future. We have done a great deal to encourage the growth of small firms by reducing the burden of form filling and simplifying planning procedures. We have allocated £2¼ million for 1986–87 in support of local enterprise agencies such as the Tyneside Enterprise Development Company, and we have extended the loan guarantee scheme. We are also helping unemployed people who wish to set up their own business through the enterprise allowance scheme which has helped nearly 2,500 people in south Tyneside since August 1983. From 3 November, new enterprise allowance scheme businesses no longer need to be wholly independent in order to qualify for assistance, this means that people can start businesses under franchise operations.
I know that the people of south Tyneside are aware of the need to enhance local employment opportunities, and that the south Tyneside economic development committee is currently formulating policies to create new jobs and enhance the area's economy.
I hope that south Tyneside and Jarrow will not forget the potential of the service sector as a source of new jobs and increased wealth.
While I am not trying to say that manufacturing is unimportant, we are experiencing a marked, and probably irreversible, shift from manufacturing-based to a service-based economy. There are now five jobs in services for every two in manufacturing, and a substantial number of the new jobs created over the past two years have been in the service sector. Perhaps the Gateshead Metro Centre, likely to create up to 5,000 jobs, is a pointer to the future. An important part of the service sector is, of course, tourism, while Jarrow, with respect, may not appear the most obvious tourist centre, the area none the less has much to offer the historically-minded tourist as well as the avid reader of Mrs. Catherine Cookson.
I have tried to demonstrate that there are encouraging signs in Jarrow's economy, and we can, and do, help hard-hit areas to overcome their economic problems. The local authority and people of Jarrow are making laudable efforts to help themselves, and we have been supporting these efforts in the ways I have described. While unemployment is still a deep and depressing problem, we are rightly providing more benefits for the unemployed of today than were available to their 1930s counterparts. The unemployed of the thirties might have received benefit and assistance benefits, but not all would have been eligible for either, now an unemployed person may receive unemployment benefit, housing benefit and—if he has children—child benefit, free school meals and free milk, thanks to our welfare state. I do not want in any way to minimise the hardships of life on the dole today, but at least conditions are demonstrably better than when Jarrow marched 50 years ago.
I hope that the hon. Gentleman will agree that we acre doing a significant amount to help both the regeneration of economic activity in his constituency, and his unemployed constituents. Though, I am sure that he thinks it is nowhere near enough. I urge him, however, to remember that the public purse is not bottomless. Throwing money at problems like Jarrow's is not the answer. Unrestrained spending achieves two things — short-term jobs—

Mr. Dixon: Will the Minister give way?

Mr. Lee: I ask the hon. Gentleman to excuse me for not giving way. I must get on.

Mr. Dixon: It is costing £15 million to keep them on the dole.

Mr. Lee: Unrestrained spending achieves two things — short-term jobs which soon disappear, and an undermined economy, which takes a long time to recover. I know that the people of Jarrow cannot put everything right themselves, but nor can the Government. We all have to work together in a difficult situation.
We believe that the Government's role is to establish the economic conditions most conducive to job creation, we have the best job creation record in Europe, but we must generate even more jobs if we are to beat unemployment in Jarrow and elsewhere. We have after too many years, a stable economy with the lowest inflation rates for 20 years. Like the hon. Gentleman I would rather see faster results, but we must not sacrifice long-term stability for speedy, ephemeral returns.

Question put and agreed to.

Adjourned accordingly at six minutes past Eleven o'clock.